Foreign & Colonial Investment Trust retains blue-chip ranking

At the latest quarterly rebalancing of the FTSE 100 index, Foreign & Colonial Investment Trust has retained its place among the 100 largest UK listed companies, despite being widely tipped to return to the FTSE 250 index after just three months in the top flight.

The £1.6bn investment trust was promoted to the Footsie at the last rebalancing in March, amid market turmoil that had seen the index of the UK's 100 biggest listed companies sink to a six-year low of 3503.

At the time, a number of commentators noted that, based on previous comparisons, FCIT's inclusion in the FTSE 100 Index could be a signal to buy UK equities, with one analyst describing it as "the best reason to buy the market yet". The last time the trust had made it into the FTSE 100, in March 2003, it effectively signalled the start of a four-year bull run.

The 141-year-old investment trust's manager, Jeremy Tigue, explained in March this year: "In bear markets individual companies are very exposed to investor concerns about their trading performance or their balance sheets; shareholders will sell first and ask questions later. The reverse phenomenon is that widely spread, conservatively financed companies such as a global investment trust rise up the list of companies. By the time this has happened the bear market is well advanced and a rally can be swift and decisive."

Now, after three months in the FTSE 100, the prediction seems to have come true: the index has risen by 12.93% to stand at 4405 on 9 June, leading to a hope that ‘normal' service has been resumed for investors.

Tigue says: "As some of these shrewd observers said, our entry to the FTSE 100 has proved a classic buy signal. We've heralded a rally, and we haven't had to dilute our value with a rights issue the way some companies have done."