1. LWDB’s unique structure has been key to its strong long-term performance.

IPS is a crucial differentiator in driving LWDB’s long-term performance. It is highly cash generative and accounts for c 20% of the trust’s NAV, but funds a third of the dividends. The strong and consistent cash flow from IPS provides the investment portfolio managers with much greater flexibility to invest across a wide range of investments including those that are low- or zero-yielding, and growth stocks, balancing the need for immediate income to pay dividends, while also growing the capital and dividends over time. Some of its top performers in recent times have been recovery stories like Rolls-Royce and Marks & Spencer, and its flexibility has helped it avoid some high yielding ‘value traps’. Being part of a large, £1.2bn, well-governed listed company is also hugely important to IPS when it comes to winning business.

2. IPS underpins the stable growth of LWDB.

Within IPS there is a diversified range of growing businesses, all in some way based on independence and trust, often benefiting structurally from legislative or regulatory developments, and are relatively insensitive to short-term economic and market fluctuations. Law Debenture was established 135 years ago as a bond trustee and corporate trusts is one of the three business groupings within IPS, the other two being pensions and corporate services, each of which is broadly similar in size. The revenue streams are diverse and significantly recurring and this underpins the stability of the business.

3. The portfolio invests in companies of all sizes with around 150 stock holdings.

The investment portfolio has been managed on a consistent basis, over many years, by James Henderson and Laura Foll from Janus Henderson Investors. It is invested in mostly UK equities (around 90%) and is managed on a long-term, bottom-up basis, with a strong valuation overlay. It has a has a ‘multi-cap’ approach, searching out investment opportunities right across the market, but at present with strong active overweighting to small- and mid-cap stocks with above average growth potential compared with the trust’s broad UK equity market benchmark. Small- and mid-cap stocks are often under-researched and overlooked by investors, providing opportunities to invest at attractive valuations.

4. LWDB has a strong track record of outperformance and dividend growth.

IPS is well into its seventh year of consistent mid-to-high single-digit growth, during which time revenue growth has averaged 8% pa and the fair value of the business has more than doubled. It continues to target mid-to-high single-digit growth annually, with opportunities to grow IPS through organic investment in some of its fastest growing businesses. As at June 2024, LWDB had outperformed its broad UK equity market benchmark over one, three, five and 10 years. Its 10-year NAV total return was almost 50% above its benchmark. It is near the very top of its sector for total performance over five, 10 and 25 years. Over the same 10-year period, DPS more than doubled and five-year growth of 11% pa is well ahead of peers. Over the longer term, LWDB has a 45-year record of increasing or maintaining dividends.