At the half-way stage of its financial year the performance of FTSE 250 investment company Bankers Investment Trust is a percentage point ahead of the FTSE All-Share index.

The trust's net asset value grew by 8.5% in the six months to the end of April to 490.5p, compared with a 7.5% rise in the All-Share index and an 8.3% increase in the 50/50 Composite index.

"Stock picking has been key to our success and the majority of the positive returns has been generated by the relative out-performance from our UK, European and American portfolios," said the trust's chairman, Richard Brewster.

Brewster believes that the trust's value orientated investment style is in tune with investors' current preoccupation with dividends and valuations in preference to "the apparent strong earnings from the highly valued, growth orientated companies."

Meanwhile, the trust took a view that Japan would recover quickly from the devastating earthquake it suffered in March, as it did from the Kobe quake in the mid-90s, and increased its exposure to that market, so that Japanese investments now form 9% of the trust's portfolio.

"This move was driven by the low valuations we could see and we intend to review the position later in the year when the economic effects will be more clearly evident," Brewster explained.

"The US portfolio was also increased as we felt company valuations were low compared to historic levels and were mismatched relative to the underlying growth rate of their earnings. US investors have been heavy sellers of domestic equities in favour of bonds for the last three years and any reverse of this trend can only be helpful to maintain a recovery in share prices," in Brewster's view.

Bankers no longer holds any bonds, and cash levels have been reduced. Gearing has been maintained at around 4%.

Gross revenue declined to £7.63m from £8.15m at the interim stage last year, while earnings per share fell 9.5% to 5.50p from 6.08p.

"The impact of slightly reduced equity dividend income in the first half, as a result of the change in the balance of our portfolio, is being rapidly offset by impressive dividend growth across all regions," Brewster said.

The Bankers chairman said it was understandable after the financial crisis that companies would be conservative with their dividend pay-outs but he believes that there are signs that companies are growing in confidence, and this is being reflected in higher dividend increases.

As for the company's own dividend payments, the trust reiterated its forecast that it will pay at least 12.7p in dividends this year, which would represent at least a 5% increase on last year's pay-out.

"The uplift in corporate investment that is required to sustain higher levels of economic growth and create new jobs has yet to materialise. Without this vital extra impetus to economies, the current mid cycle pause in growth that we are witnessing may well continue through to the Autumn," Brewster predicted.

"There are certainly plenty of worries for investors, creating inaction in terms of putting savings to work into real assets. However, there is little discussion about what events might occur that would encourage those on the sidelines to buy equities. Over the coming six months we might have more clarity about when the Chinese stop tightening monetary policy. We may see some stabilisation in US house prices and expect corporate earnings to have advanced, thus reducing the P/E [price/earnings ratio] of the market if there is no movement upwards in share prices," Brewster suggested.

At 1:25pm (22/6/11), the share price of Bankers was down 1.5p at 415p.

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