Interim Report for the period ended 31 Dec 2025
CQS New City High Yield Fund Limited (AIM: NCYF) reported a net asset value (NAV) total return of 4.85% and an ordinary share price total return of 4.61% for the six months ending 31 December 2025. The company maintained an attractive dividend yield of 8.81%, based on an annualised rate of 4.51 pence per share, with its ordinary shares trading at a premium of 6.33% as of the reporting date. During this period, NCYF issued £22,545,000 in equity, underscoring its capacity to attract investment even amid market volatility.
The interim results reflect a continued commitment to delivering shareholder value, consistent with the company's strategy articulated in previous announcements. CQS New City High Yield Fund has historically focused on high-yielding fixed interest securities, including corporate bonds and equities, and has successfully increased dividends annually since its inception in 2007. The reported NAV total return of 4.85% is an improvement from the 3.58% recorded in the same period last year, indicating a robust performance against a backdrop of fluctuating bond markets. The firm’s portfolio duration of three to four years is strategically designed to mitigate interest rate risks, a critical factor in the current economic climate.
Financially, NCYF's balance sheet remains solid, with total assets less current liabilities reported at £358.9 million, a 5.93% increase from £338.8 million as of 30 June 2025. The company’s NAV per ordinary share slightly decreased to 48.15 pence from 48.37 pence, reflecting the market's volatility. However, the ordinary share price remained relatively stable at 51.20 pence, indicating investor confidence. The company’s gearing ratio increased to 10.92%, up from 10.02%, which suggests a cautious approach to leveraging in the current market environment. The ability to issue equity during a period of uncertainty further highlights NCYF's strong market position and investor appeal.
In terms of peer comparison, NCYF operates in a niche segment of the investment trust market, focusing on high-yield fixed income. Direct peers include other investment trusts and funds that similarly target high-yield securities. Notable comparables include the UK-based investment trust Highbridge Tactical Credit Fund (LSE: HTCF), which focuses on high-yield corporate credit, and the VPC Specialty Lending Investments PLC (LSE: VSL), which invests in a diversified portfolio of loans and credit instruments. These peers also operate within the high-yield space but may vary in their specific strategies and asset allocations. While NCYF's premium trading status and dividend yield are competitive, the broader market for high-yield investments remains challenging, with varying performances among peers.
The significance of NCYF's results lies in its ability to deliver consistent returns and maintain a strong dividend yield in a volatile environment. The reported NAV total return and share price performance indicate resilience and effective management, positioning the fund favorably against its peers. The ongoing issuance of equity suggests that investor confidence remains robust, which is crucial for future growth and capital appreciation. As the UK economy shows signs of improvement and inflation begins to cool, NCYF is well-placed to capitalise on emerging opportunities in the high-yield market, potentially enhancing its value creation pathway.
In conclusion, CQS New City High Yield Fund Limited's interim report for the six months ended 31 December 2025 reflects a strong performance amid market volatility, with a solid NAV total return and attractive dividend yield. The company’s strategic focus on high-yield securities and its ability to issue equity during challenging times underscore its competitive position within the investment trust sector. As the economic landscape evolves, NCYF's diversified portfolio and short duration strategy may provide a buffer against interest rate fluctuations, enhancing its prospects for continued success.