Benchmark beater with dividends too

By the Editorial Team · Tuesday, October 13, 2026

City of London Investment Trust has achieved a 15.3% return year-to-date, outperforming the FTSE All-Share benchmark and maintaining over 60 years of consecutive dividend growth. Its stable income, diversified UK-focused portfolio, and low-cost fixed borrowing make it an attractive choice for investors seeking steady returns and resilience during market volatility.

City of London Investment Trust, with a market capitalization of £3.1 billion, has emerged as a strong performer in the UK investment trust sector, delivering a year-to-date return of 15.3%, surpassing the FTSE All-Share benchmark’s 12% gain. The trust combines consistent dividend growth with capital appreciation, making it a popular choice among retail investors seeking steady income and exposure to UK equities.

Founded in 1891 originally as the City of London Brewing Company, the trust pivoted to investment activities in 1931. It is presently managed by Job Curtis, who has overseen its performance since 1991 and holds a significant personal stake of around 320,000 shares valued at approximately £1.8 million. The trust is part of the Janus Henderson group.

One of City of London’s distinguishing features is its uninterrupted record of increasing dividends for over 60 years. This is supported by a policy allowing it to retain up to 15% of annual income in a reserve fund, which can be drawn upon to maintain dividend payouts during periods of market stress such as the 2008 financial crisis and the 2020 pandemic. The quarterly dividends provide a consistent income stream, with the next payout scheduled to go ex-dividend on October 22 and payable on November 30.

The trust’s portfolio is roughly 90% invested in UK-listed equities but has a global earnings footprint. Its top five holdings include HSBC, Shell, NatWest, BAE Systems, and British American Tobacco. Geographically, about 42% of earnings derive from the UK, followed by 21% from North America, 15% from the Asia Pacific region, 12% from Europe, and 10% from emerging markets. Sector exposure is concentrated with 35% in financials, 18% in consumer staples, 8% each in energy and industrials, and 7% in healthcare.

Over the past five years, the trust has delivered returns of 88%, significantly outpacing traditional savings accounts that fail to shield from inflationary pressures. Over ten years, the total return has reached 132%. Investors benefit from the trust’s use of fixed low-cost borrowing facilities of £80 million, locked in at an average interest rate of 2.8% for 20 years, enabling the trust to enhance income by leveraging dividend yields higher than the cost of debt.

While passive UK equity index funds offer lower ongoing charges, typically around 0.2%, City of London’s management fees of 0.36% remain competitive within the investment trust sector. Unlike passive funds, the trust’s approach to dividend smoothing helps protect income during market downturns.

Shares currently trade at a modest premium of about 2% to net asset value, reflecting its popularity among individual investors. Given its track record of consistent dividend growth, attractive yields, and outperformance relative to its benchmark, City of London Investment Trust continues to be viewed as a compelling option for investors seeking UK market exposure without the complexities of direct equity selection.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.