Martin Currie Global Portfolio Trust (LSE: MNP)

Last close As at 19/07/2024

GBP3.66

−1.00 (−0.27%)

Market capitalisation

GBP245m

Martin Currie Global Portfolio Trust’s objective is to achieve a total return in excess of the total return of the benchmark MSCI AC World Index. Prior to 1 February 2020 the objective was to generate a capital return in excess of the capital return of a less broad global index.

Equity Proposition

Martin Currie Global Portfolio Trust (MNP) is managed by Zehrid Osmani at Martin Currie, which is owned by Franklin Templeton. He aims to outperform the trust’s benchmark, the MSCI All Country World Index.

#1 The manager follows a disciplined, bottom-up stock selection process

Osmani has an unconstrained, high-conviction approach and invests with a long-term, five- to 10-year horizon. There is a systematic three-step investment process:

1) Idea generation: the total universe of around 2,800 listed global stocks is screened down to an investible universe of around 500 companies and then a research pipeline of 90+ names is prioritised to identify companies with a combination of quality, sustainable growth and an attractive valuation.

2) Fundamental analysis is based on eight key criteria: industry analysis, a company’s growth drivers, returns, financial strength, accounting, corporate ethos, ESG profile and valuation. A proprietary research template is compiled for companies reviewed, and each is given a conviction rating between 1 (strong buy) and 5 (sell).

3) Portfolio construction: each position is weighted appropriately, aiming to ensure a meaningful contribution to returns. To better understand exposures and risks, additional research is undertaken to analyse geographic sources of revenues and profit. Companies are also assessed in terms of end-user exposure at a tier one level – the consumer, business and government – and then at a more detailed tier two level focusing on individual sectors and industries.

Stocks may be sold when they have reached their price target or if there are higher-conviction opportunities elsewhere.

#2 ESG is a very important element of the investment process

The manager strongly believes that including ESG analysis in investment decisions delivers improved returns for MNP’s shareholders and it is integrated throughout the proprietary investment process. More than 50 underlying criteria are assessed to capture the complexity of ESG risks facing a company’s long-term growth outlook and sustainability.

#3 A high-conviction, straightforward equity portfolio

MNP is a straightforward equity fund with no unlisted businesses or derivatives. The portfolio has around 30 holdings, with the largest 10, across a range of industries, making up more than 50% of the fund. Four of the 11 market sectors have a zero weighting in the portfolio as these companies do not meet the manager’s long-term quality growth criteria. These include fossil fuels, weapons manufacturers and mining companies.

Osmani focuses on three mega-trend growth themes: the future of technology, resource scarcity and demographic change. Within this framework, three areas currently have meaningful representation in the portfolio – artificial intelligence, energy transition and healthcare solutions for an ageing global population.

The manager has remained disciplined and is confident that the trust’s relative performance will continue to improve following a period when growth stocks devalued in a rising interest rate environment.

#4 MNP has a stable dividend and a zero-discount policy

The annual dividend has been maintained at 4.20p per share for the last seven financial years and there are quarterly distributions (three interim payments of 0.90p per share and a fourth interim payment of 1.50p). In June 2022, MNP’s shareholders approved the payment of dividends from realised capital gains. At the end of FY23 (ending 31 January), the trust held distributable reserves equivalent to around 49x the annual dividend.

MNP’s board employs a zero-discount policy aiming to ensure that, in normal market conditions, the trust’s shares trade close to NAV. In an environment of wider-than-average investment trust discounts, MNP’s shares are repurchased on most trading days.

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Equity Analyst

Melanie Jenner

Mel Jenner

Director, Investment Trusts

Key Management

  • Christopher Metcalfe

    Chairman

  • Christopher Pyrkosz

    Head of Investment Trust Marketing

  • Zehrid Osmani

    Fund manager

Share Price Performance

Price Performance
% 1M 3M 12M
Actual (4.2) (0.8) 6.7
Relative (4.9) (5.5) (3.6)
52 week high/low 397.0p/299.0p

Overview

Martin Currie Global Portfolio Trust (MNP) has been managed by Zehrid Osmani since October 2018. He runs a high-conviction, relatively concentrated portfolio of quality growth companies with pricing power. The manager believes that pricing power is particularly important as he considers that consensus earnings expectations are too bullish and sticky inflation has pushed out the prospect of lower interest rates. With investors focusing on short-term economic data points and central bank commentary, Osmani expects continued share price volatility, which over the longer term should favour MNP’s portfolio of high-quality growth businesses with strong cash flows and robust balance sheets.

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