Value-oriented investment trust Temple Bar (TMPL) has removed gearing – borrowing money to invest – after its share price more than halved since the coronavirus crisis began.

Following a discussion between its board of directors and manager Alastair Mundy, the latter agreed to sell the defensive stocks in the portfolio to raise cash and offset borrowing.

The £484m trust invests in equities, metals and cash, and has large positions in banks and oil producers, both among the worst performing sectors year to date. Its largest holding at the start of 2020 was outsourcing group Capita (CPI), representing nearly 8% of the portfolio. Year-to-date Capita’s share price has fallen by 80% after the company said its restructuring would take longer and cost more than originally estimated.

Analysts at Numis said the discussion between Mundy and the board would’ve been ‘interesting’ and added: ‘We can understand the urge to reduce risk through a reduction of gearing, but we expect it may have been difficult for a contrarian manager to sell holdings after a market fall.’

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