Foreign & Colonial Investment Trust back in FTSE 250

At the latest quarterly rebalancing of the FTSE 100 index, Foreign & Colonial Investment Trust has returned to the ranks of the FTSE 250 Index after six months among the 100 largest UK listed companies.

The £1.9bn investment trust was promoted to the Footsie at the 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. In spite of being widely tipped to return to the second tier in June, it retained its place over the summer as UK equity markets continued to perform strongly.

But Foreign & Colonial Investment Trust's manager, Jeremy Tigue, is meeting relegation with relish. He commented: "As I said earlier in the year, conservatively financed, globally diversified investment trusts tend to rise up the market capitalisation scale in bear markets, where investors in single companies will often sell first and ask questions later. In these market conditions, rallies can be swift and decisive, resulting in those single companies once more taking over the investment trusts in terms of market capitalisation.

"I am delighted that FCIT is leaving the FTSE 100 as it comes as a result of massive advances in the share prices of many of the kinds of companies we invest in. I would far rather be outside the FTSE 100 when it is at 4900 than inside it at 3500."

At the time of FCIT's March promotion, a number of commentators noted that, based on previous comparisons, the trust's inclusion in the FTSE 100 Index could be a signal to buy the market, 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.

Now, after six months in the FTSE 100, the prediction seems to have come true: the index has risen by 32.8% (in capital return terms, 10 March to 7 September, source: Lipper) to stand at 4947 at the close on 8 September, 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. As we come out of the index at this month's rebalancing, it means we've done our job - we've heralded a rally, and stuck to what we do best: providing a globally diversified spread of investments aimed at steady growth of both capital and income."

The quarterly index rebalancing is based on closing prices on 8 September and will be implemented on 20 September.