Diverse Income Trust plc (LON:DIVI) has announced its Factsheet for the month ended 31 March 2024.
During March, a new trend may have started to develop, with the oil price steadily rising, and even some metal prices firming late in the month. It was also notable that the share prices of many of the largest companies also lost momentum during March.
The trust’s portfolio tends to invest in all areas of the stock market, including some energy and mineral holdings. Some of these are large and medium sized companies but importantly in our view the trust includes energy and commodity stocks that are listed on the Alternative Investment Market. We include holdings in these industry sectors for two reasons.
1. The company share price fluctuations of those in the energy and mineral sectors tend to move independently from other UK industry sectors. By including a range of energy and mineral holdings it greatly improves portfolio diversification.
2. Furthermore, and perhaps even more importantly in our view, during geopolitical tensions when many company share prices are often weak, the energy and mineral sectors can sometimes deliver stronger returns than usual. On occasions, they can be a lot stronger, as energy and commodity prices spike upwards.
Interestingly, recovery in the energy and commodity sectors tends to favour the UK stock market, predominantly because it has such large weightings in these sectors. Indeed, when inflationary pressures and recessions were frequent between 1965 and 1985 for example, the returns on these sectors may have been part of the explanation why the UK stock market outperformed the US stock market.
The portfolio still includes numerous holdings invested in small companies that pay an income in many other industry sectors that are also standing on what we believe are overlooked valuations. As these start to recover, we anticipate nothing short of a small company supercycle from here. Gervais Williams & Martin Turner 31.03.2024
Diverse Income Trust plc invests primarily in quoted or traded UK companies with a wide range of market capitalisations, but a long-term bias toward small and medium sized companies.
