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Enhanced process driving outperformance

Martin Currie Global Portfolio Trust 16 December 2019 Review
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Martin Currie Global Portfolio Trust

Enhanced process driving outperformance

Investment trusts
Global equities

16 December 2019

Price

295.5p

Market cap

£245m

AUM

£247m

NAV*

298.6p

Discount to NAV

1.0%

NAV**

299.2p

Discount to NAV

1.2%

*Excluding income. **Including income. As at 12 December 2019.

Yield

1.4%

Ordinary shares in issue

82.9m

Code

MNP

Primary exchange

LSE

AIC sector

Global

Benchmark

FTSE World

Share price/discount performance

Three-year performance vs index

52-week high/low

309.5p

228.5p

304.0p

226.4p

*Including income.

Gearing

Gross*

0.0%

Net cash*

2.6%

*As at 31 October 2019.

Analysts

Mel Jenner

+44 (0)20 3077 5720

Sarah Godfrey

+44 (0)20 3681 2519

Martin Currie Global Portfolio Trust is a research client of Edison Investment Research Limited

Martin Currie Global Portfolio Trust (MNP) has been managed by Zehrid Osmani since 1 October 2018. He has refined the investment process, taking fundamental analysis deeper, aiming to enhance stock selection and the trust’s returns, and says that advanced risk analytics enable the portfolio to be managed in a more accurate way. The manager aims to build a high-conviction, but diversified fund of quality stocks in terms of superior top-line, profit and free cash flow growth, with high returns on capital, and room for further improvement. Whatever the market environment, Osmani is confident on MNP’s prospects versus the benchmark on a five-year view.

NAV outperformance versus the FTSE World Index benchmark – new manager is making a positive difference

Source: Refinitiv, Edison Investment Research

The market backdrop

Investors are experiencing an environment of slowing global growth – arguably affected by the ongoing dispute between the US and its trading partners – along with above-average valuations (the forward P/E multiple of the Datastream World Index is 15% higher than its 10-year average). With this as a backdrop, market participants may benefit from a focus on high-quality growth companies trading at reasonable valuations.

Why consider investing in MNP?

New manager has tightened up the process and improved performance.

High-conviction portfolio of global equities, with no gearing, derivatives or unlisted stocks.

Competitive fee structure: 0.4% annual management fee.

MNP’s shares regularly trade close to NAV.

Effective zero discount mechanism

MNP employs a zero discount policy, which has proved effective: over the last one to five years, the trust has traded at average discounts in a range of 0.2% to 0.6%. Its current 1.2% share price discount to cum-income NAV compares to a range of a 3.1% premium to a 2.6% discount over the last 12 months. MNP has a progressive dividend policy; since launch in March 1999 the annual distribution has compounded at a rate of 5.9% pa (the trust’s current dividend yield is 1.4%).

Exhibit 1: Trust at a glance

Investment objective and fund background

Recent developments

Martin Currie Global Portfolio Trust’s objective is to achieve long-term capital growth in excess of the capital return of the benchmark FTSE World Index by investing in a diversified portfolio of international quoted investments. The benchmark was changed on 1 June 2011 from the FTSE All-Share Index to the FTSE World Index when the trust adopted a more global focus, and another change to the MSCI AC World Index (total return) has been approved with effect from FY21 (see Fund profile section).

3 December 2019: Announcement of 0.9p third interim dividend for FY20 (flat year-on-year).

24 September 2019: Six-month report to 31 July 2019. NAV TR +22.7% versus benchmark TR +16.7%. Share price TR +28.6%. Announcement of 0.9p second interim dividend for FY20 (flat year-on-year).

21 June 2019: Announcement of the appointment of Christopher Metcalfe as a non-executive director, with effect from 19 September 2019.

Forthcoming

Capital structure

Fund details

AGM

June 2020

Ongoing charges

0.65% (H120)

Group

Martin Currie Investment Mgmt (UK)

Final results

April 2020

Net cash

2.6%

Manager

Zehrid Osmani

Year end

31 January

Annual mgmt fee

0.4%

Address

Saltire Court, 20 Castle Terrace, Edinburgh EH1 2ES

Dividend paid

Jul, Oct, Jan, Apr

Performance fee

See page 9

Launch date

March 1999

Trust life

Indefinite

Phone

+44 (0)131 229 5252

Continuation vote

None

Loan facilities

None

Website

www.martincurrieglobal.com

Dividend policy and history (financial years)

Share buyback policy and history (financial years)

MNP moved to paying quarterly dividends from FY14 (previously semi-annual). Dividends are paid in July, October, January and April. The board is committed to a progressive dividend policy over the longer term.

The board employs a zero discount policy. Renewed annually, the trust has authority to purchase up to 14.99%, and allot up to 10% of issued share capital.

Shareholder base (as at 31 October 2019)

Portfolio exposure by geography (as at 31 October 2019)

Top 10 holdings (as at 31 October 2019)

Company

Country

Sector

Portfolio weight %

31 October 2019

31 October 2018*

Visa

US

Technology

4.2

3.8

Automatic Data Processing

US

Industrials

4.0

4.2

ResMed

US

Healthcare

4.0

N/A

AIA

Hong Kong

Financials

3.9

4.1

Straumann

Switzerland

Healthcare

3.9

N/A

Linde

US

Basic materials

3.9

3.8

Microsoft

US

Technology

3.9

N/A

CSL

Australia

Healthcare

3.8

N/A

Beazley

UK

Financials

3.4

N/A

Adidas

Germany

Consumer goods

3.3

N/A

Top 10 (% of holdings)

38.3

36.3

Source: Martin Currie Global Portfolio Trust, Edison Investment Research, Bloomberg, Morningstar. Note: *N/A where not in end-October 2018 top 10.

Market outlook: Focus on growth and valuations

As shown in Exhibit 2 (LHS), global equities have significantly outpaced the performance of the UK market over the last five years, partly due to sterling weakness since the Brexit vote in June 2016. The dominant US market (c 60% of the FTSE World Index) has been particularly buoyant in recent years, supported by continued easy monetary policy and corporate tax cuts. However, global growth is slowing, partly attributable to the dispute between the US and its trading partners. In its October World Economic Outlook, the International Monetary Fund reduced its 2019 global and US growth forecasts by 0.2% in each case, compared with its July outlook, to 3.0% and 2.4%, respectively. Looking at valuations of Datastream indices in the right-hand table below, global equities are trading on a forward P/E multiple of 15.7x, which is a 15% premium to their 10-year average, while the US market looks even more extended, trading at a 20% premium. It would seem appropriate to be more selective given the current backdrop of slowing growth and above-average P/E multiples; investors may benefit from focusing on companies with sustainable growth profiles whose valuations afford a margin of safety.

Exhibit 2: Market performance and valuation

FTSE World and FTSE All-Share indices (£ total return) last five years

Valuation metrics of Datastream indices (as at 13 December 2019)

 

Last

High

Low

10-year
average

Last as % of
average

US

P/E 12 months forward (x)

18.5

19.0

11.2

15.4

120

Price to book (x)

3.7

3.7

1.7

2.6

141

Dividend yield (%)

1.9

2.4

1.7

2.0

93

Return on equity (%)

13.4

15.0

5.0

13.5

100

World

P/E 12 months forward (x)

15.7

16.3

9.8

13.6

115

Price to book (x)

2.2

2.2

1.4

1.8

123

Dividend yield (%)

2.5

3.1

2.2

2.6

97

Return on equity (%)

11.1

13.3

5.0

11.2

99

Source: Refinitiv, Edison Investment Research

Fund profile: High-conviction global equity portfolio

Launched in March 1999, MNP is listed on the Main Market of the London Stock Exchange. Since 1 October 2018, the lead manager has been Zehrid Osmani. He was formerly a senior portfolio manager and head of European equities research at BlackRock, with a proven track record in fundamental research and unconstrained investment. As well as managing MNP, he is head of Martin Currie’s global long-term unconstrained (GLTU) team.

MNP’s portfolio is focused but diversified, containing 25–40 high-quality global equities (32 at end-October 2019). There are no limits on portfolio construction, but the combination of stocks must not lead to an unintended reliance on a particular macroeconomic factor, such as interest rates or oil prices. Although not employed since 2008, gearing of up to 20% of NAV is permitted; at end-October 2019, MNP had a net cash position of 2.6%.

At the June 2019 AGM, a resolution was passed to amend the trust’s investment objective (with effect from 1 February 2020) from long-term capital growth in excess of the capital return of the FTSE World Index, to long-term returns in excess of the total return from the MSCI All Country World Index. Benchmarking against a total rather than a capital return will improve MNP’s comparability with its peers, while the MSCI Index is viewed as representing the global market more effectively, as it includes emerging markets.

Data from MNP show that from launch to end-October 2019, the trust’s NAV and share price total returns of 345.9% and 458.3% respectively are ahead of the benchmark’s 301.6% total return.

The fund manager: Zehrid Osmani

The manager’s view: Continuing to focus on the long term

Offering his perspective on the macro backdrop, Osmani argues that the global economic slowdown is being exacerbated by the US-China trade dispute. He says that European growth, especially in Germany, has been particularly negatively affected given its exposure to China. The manager’s expectation for 2020 is for an environment of ‘muddling along’, with a tepid global GDP growth outlook. Osmani notes a lack of inflationary pressure and says that monetary policy will continue to remain important; he expects central bank actions will be data dependent, but will remain accommodative. While risks of a recession could resurface, the manager’s base case is that this will not happen in 2020; however, when a recession does occur, he expects it to be shallow and short-lived. Given his long-term investment approach, Osmani will look through any downturn. While forward P/E valuations are greater than historical averages, the manager says that in relative terms, equities look very attractive compared with low or negative bond yields.

Looking at features of the global stock market in 2019, Osmani notes a wide spread in valuations between value and high-quality growth stocks. He says there was a summer snapback with a rotation into value stocks in September, but that effect has now been diluted as growth stocks are once again leading the charge. The manager believes that market rotation will be relevant going forward, but a change in market leadership is difficult to time. As a long-term investor, he will continue to focus on high-quality growth companies with sustainable business models, solid cash flow generation and the potential to increase returns. Osmani believes that this investment approach will be successful over the long term.

The manager suggests that considering the backdrop of a major flare-up in trade issues, a slowdown in economic momentum, and persistent Brexit delays, it is surprising how well global markets have fared in 2019, with several hitting all-time highs. He argues the rapid U-turn in monetary policy, with the Federal Reserve moving from a tightening to an easing mode and the European Central Bank remaining accommodative, has been supportive for equities. However, there have been sharp downgrades to 2019 earnings estimates over the course of the year (the consensus for the MSCI World Index has moved from +7% to -1%). The manager is somewhat cautious on 2020 estimates of 10% earnings growth given a slowing economy and a lack of inflation; he thinks that mid-single-digit growth is a more realistic outcome. Osmani says that the tone of company managements is also one of caution, and the impact of trade tensions has led to lower capex and more prudent management of businesses’ balance sheets. On the plus side, continued low interest rates have led to record levels of global mergers and acquisitions (M&A), and the manager expects the elevated pace to continue in 2020.

Asset allocation

Investment process: Bottom-up portfolio construction

Martin Currie’s GLTU team aims to generate long-term risk-adjusted returns above those of MNP’s benchmark by focusing on high-quality growth stocks. These are identified by proprietary fundamental and systematic research, and the results is a portfolio that is unconstrained; the manager has a five- to 10-year investment horizon. There are three stages to the investment process: idea generation, in-depth fundamental research, and portfolio construction.

Idea generation – the total universe of c 2,800 stocks is screened down to an investible universe of c 500 stocks and then to a research pipeline of around 80 names. Osmani and the six other members of the GLTU team (part of a wider group of more than 50 investment professionals) seek high-quality companies with sustainable growth profiles, that are trading on attractive valuations. They believe companies with a high and sustainable return on invested capital (above their weighted average cost of capital) can generate above-average total returns over the long term.

Fundamental analysis – a proprietary research template is compiled for each company reviewed, to ensure a consistent approach. The team seeks reasonably valued firms with strong industry, financial and governance attributes. A company considered for inclusion in the MNP portfolio is likely to have a dominant market position with strong pricing power, operating in an industry with high barriers to entry, generating high returns and strong cash flow, with a respected management team. Risk assessment is a key element of the research process, focusing on industry, company-specific, governance & sustainability, and portfolio risks. Osmani stresses the importance of research debates and avoiding behavioural bias within the GLTU team. For stocks considered for inclusion in the portfolio, the presentation of the research is assessed by each team member. This procedure aims for optimal decision-making and the avoidance of ‘group-think’ behaviour.

Portfolio construction – MNP’s portfolio is diversified and contains high-conviction holdings. Proprietary analysis breaks down the fund’s geographic exposure by revenue and profit rather than where a company is listed, allowing Osmani to ascertain MNP’s exposure by economic value (the fund is currently overweight developed and underweight emerging markets). The manager also analyses the portfolio in terms of exposure to the end user at the consumer, business and government levels.

There are three overarching themes within MNP’s portfolio that Osmani believes will span multiple decades – the future of technology (including outsourcing for productivity and cyber security), demographic change (including growth of the emerging markets middle class and increasing longevity) and resource scarcity (such as climate change and electric vehicles).

Osmani believes that a focus on a company’s environmental, social and governance (ESG) credentials improves the investment process and delivers improved returns for MNP’s shareholders. He notes that Martin Currie has ESG expertise spanning more than a decade. Each company analysed is given an ESG score between 1 (lowest risk) and 5 (highest risk), based on a variety of factors, including the quality of a firm’s board, its management team, its remuneration policies, and environmental and social risks.

MNP’s active share remains high at 93.6% (this is a measure of how a fund differs from its benchmark, with 0% representing full index replication, and 100% showing no commonality). Compared with the FTSE World Index it has higher forecast earnings and dividend growth, and a higher valuation in terms of P/E and price-to-book multiples (reflecting its growth and quality biases). These are also illustrated by the portfolio’s higher return on equity, return on invested capital and stronger balance sheet compared with the benchmark. Portfolio turnover had increased due to Osmani’s shift to a fully unconstrained strategy starting at the beginning of 2019; it is now down to a more normal 10–20% pa run rate, implying a holding period of five to 10 years.

Current portfolio positioning

At end-October 2019, MNP’s top 10 holdings made up 38.3% of the portfolio, a modestly higher concentration than 36.3% a year earlier; four positions were common to both periods. As shown in Exhibit 3, the largest geographic changes over the 12 months to end-October 2019 were a higher exposure to Europe (+8.9pp) and a lower weighting to North America (-8.0pp). This has increased the established portfolio biases towards Europe (now a 22.7pp overweight versus the benchmark, with c 5% of the fund held in UK companies) and against North America (19.8pp underweight).

Exhibit 3: Portfolio geographic exposure vs FTSE World Index (% unless stated)

Portfolio end-
October 2019

Portfolio end-
October 2018

Change
(pp)

Index
weight

Active weight
vs index (pp)

Trust weight/
index weight (x)

Europe (including UK)

43.0

34.1

8.9

20.3

22.7

2.1

North America

41.2

49.1

(8.0)

60.9

(19.8)

0.7

Asia Pacific ex-Japan

7.9

6.5

1.4

5.7

2.2

1.4

Emerging markets

7.9

6.5

1.4

4.3

3.6

1.8

Israel

0.0

3.6

(3.6)

0.2

(0.2)

0.0

Japan

0.0

0.0

0.0

8.6

(8.6)

0.0

Total

100.0

100.0

100.0

Source: Martin Currie Global Portfolio Trust, Edison Investment Research. Note: Adjusted for cash. Numbers subject to rounding.

In terms of sector exposure (highlighted in Exhibit 4), over the last 12 months to end-October 2019, the largest changes are an 8.3pp higher weighting in healthcare, and lower exposure to consumer services (-3.8pp) and technology (-3.6pp). The structure of the portfolio is similar to end-June 2019 (shown in our last note published in July) with meaningful overweight exposure to healthcare (+9.6pp) versus the benchmark, industrials (+8.7pp) and consumer goods (+6.5pp) and an underweight in financials (-8.9pp). MNP continues to have no exposure to the oil & gas, utilities and telecom sectors, which together currently make up c 11% of the benchmark. The manager argues that companies in these sectors often fail to generate returns above their cost of capital.

Exhibit 4: Portfolio sector exposure vs FTSE World Index (% unless stated)

Portfolio end-
October 2019

Portfolio end-
October 2018

Change
(pp)

Index
weight

Active weight
vs index (pp)

Trust weight/
index weight (x)

Industrials

22.1

23.0

(1.0)

13.4

8.7

1.6

Healthcare

21.0

12.8

8.3

11.5

9.6

1.8

Consumer goods

17.9

14.6

3.3

11.4

6.5

1.6

Technology

15.4

19.0

(3.6)

16.7

(1.3)

0.9

Financials

11.8

12.8

(1.0)

20.7

(8.9)

0.6

Consumer services

7.8

11.6

(3.8)

11.2

(3.4)

0.7

Basic materials

4.0

6.2

(2.2)

4.0

0.0

1.0

Telecommunications

0.0

0.0

0.0

2.8

(2.8)

0.0

Utilities

0.0

0.0

0.0

3.4

(3.4)

0.0

Oil & gas

0.0

0.0

0.0

5.0

(5.0)

0.0

Total

100.0

100.0

100.0

Source: Martin Currie Global Portfolio Trust, Edison Investment Research. Note: Adjusted for cash. Numbers subject to rounding.

Osmani highlights some of the important transactions in MNP’s portfolio in recent months. The position in US precision instruments company Mettler Toledo (a niche player with pricing power) was sold in July, as the stock had rallied and reached the manager’s price target. Timing of the sale proved to be fortuitous, as Mettler Toledo’s share price subsequently fell by c 25% due to a combination of reduced guidance from peer Illumina, sell-side recommendation downgrades and the company acknowledging a more challenging operating environment given the macro backdrop of trade tensions. The manager took advantage of Mettler Toledo’s share price pullback by re-initiating a position in October. He forecasts the company can generate mid-single-digit top-line, 10% EBIT and mid-teens EPS growth annually over the next five years, while increasing its return on invested capital from 31% to 43% over this period.

In July, Osmani initiated two new positions in Adobe and Masimo. Adobe is a US-based multinational computer software company. It is a dominant player in its fields of multimedia, creativity and digital marketing products; its strong position is supported by the company’s robust research and development programme, and Osmani says that Adobe’s software is critical to the creation and distribution of online content. The manager forecasts annual high-teens revenue and earnings growth over the next five years, while broadly doubling its return on invested capital to 60% over this period. Osmani explains that US-based medtech company Masimo is ‘an exciting name’; it develops and manufactures innovative non-invasive patient monitoring technologies and sensors. He believes that the company’s niche operations, high market share, barriers to entry and level of recurring revenues (supported by sales of consumable products) should enable its return on invested capital to increase from 32% to 44% over the next five years.

Within the industrial sector, in June, the manager switched the lower-conviction holding in US-based Rockwell Automation (industrial automation and technology) into Sweden-based Hexagon, which he believes is better positioned in industrial automation robotics. The company is transitioning its business model to include more software along with its hardware products, which should generate a higher level of recurring revenues and an improved return on invested capital; the manager forecasts an increase from 10% to 14% over the next five years.

The positions in Check Point Software (which was close to price target) and Prudential (where the manager has concerns about its capital base) were sold over the summer.

Performance: Clear inflexion under new manager

Exhibit 5: Five-year discrete performance data

12 months ending

Share price
(%)

NAV
(%)

FTSE World
(%)

MSCI AC World
(%)

FTSE All-Share
(%)

30/11/15

2.3

2.5

2.6

2.0

0.6

30/11/16

25.2

23.1

25.6

25.6

9.8

30/11/17

12.1

13.9

15.4

15.7

13.4

30/11/18

4.7

5.2

6.0

5.6

(1.5)

30/11/19

21.2

21.2

13.1

12.8

11.0

Source: Refinitiv. Note: All % on a total return basis in pounds sterling.

Exhibits 5 and 6 highlight MNP’s particularly strong investment performance over the last year (to end-November), with NAV and share price total returns of 21.2%. However, absolute returns over longer periods are also very respectable. Over the last three, five and 10 years, the trust has generated NAV total returns in a range of 12.1% to 13.3%, and share price total returns between 12.5% and 12.9%.

Exhibit 6: Investment trust performance to 30 November 2019

Price, NAV and benchmark total return performance, one-year rebased

Price, NAV and benchmark total return performance (%)

Source: Refinitiv, Edison Investment Research. Note: Three, five and 10-year performance figures annualised. Benchmark changed from FTSE All-Share to FTSE World index on 1 June 2011.

MNP’s relative performance is shown in Exhibit 7. Its NAV and share price total returns have outperformed the FTSE World Index benchmark over almost all of the periods shown. The trust has also significantly outpaced the bellwether UK index over one, three, five and 10 years, highlighting the potential benefits of investing overseas.

Osmani comments that performance in recent months has generally been ‘pretty strong’, due to both stock selection and asset allocation. Positive contributors include ResMed (US – medical equipment), CSL (Australia – blood fractionation), Ferrari (Italy – luxury sports cars), Straumann (Switzerland – dental equipment and supplies) and Adidas (Germany – sportswear), four of which are top 10 holdings. Positions that have detracted from relative performance include Align Technology (US – orthodontics), Prudential (UK – life insurance – holding was sold), Tencent (China – multinational conglomerate) and Apple (US – technology – not owned).

Exhibit 7: Share price and NAV total return performance, relative to indices (%)

 

One month

Three months

Six months

One year

Three years

Five years

10 years

Price relative to FTSE World

0.7

0.8

(2.1)

7.2

2.8

2.3

7.6

NAV relative to FTSE World

1.6

0.9

0.7

7.2

5.0

2.9

0.1

Price relative to MSCI AC World

0.8

1.1

(1.6)

7.5

3.3

3.3

9.8

NAV relative to MSCI AC World

1.7

1.2

1.1

7.5

5.5

3.9

2.2

Price relative to FTSE All-Share

1.1

(1.3)

1.8

9.2

14.7

33.0

52.6

NAV relative to FTSE All-Share

1.9

(1.2)

4.6

9.2

17.1

33.8

42.0

Source: Refinitiv, Edison Investment Research. Note: Data to end-November 2019. Geometric calculation.

The inflexion in MNP’s relative performance is clearly shown in Exhibit 8. As a reminder, Osmani became the trust’s lead manager on 1 October 2018.

Exhibit 8: NAV total return performance relative to benchmark over 10 years

Source: Refinitiv, Edison Investment Research

Discount: Zero discount policy

MNP is currently trading at a 1.2% share price discount to cum-income NAV, which compares to a range of a 3.1% premium to a 2.6% discount over the last 12 months. The board has employed a zero discount policy since July 2013, aiming to ensure that, in normal market conditions, MNP’s shares trade close to NAV. This has proved effective, as over the last one, three and five years its discount has averaged 0.2%, 0.6% and 0.5%, respectively.

Exhibit 9: Share price premium/discount to NAV (including income) over three years (%)

Source: Refinitiv, Edison Investment Research

Renewed annually, the trust has authority to repurchase up to 14.99% of its shares and allot up to 10% of its issued share capital in order to manage a discount or premium. So far in FY20, c 1.8m shares have been repurchased at a cost of c £4.9m, and 1.0m shares have been issued raising c £2.9m (a net decrease in the share base of 1.0%).

Capital structure and fees

MNP is a conventional investment trust with one class of share. There are currently 82.9m ordinary shares in issue. Although gearing of up to 20% of NAV is permitted, this has not been employed since 2008. At end-October 2019, MNP had a net cash position of 2.6%.

Martin Currie is paid a management fee of 0.4% pa of MNP’s ex-income NAV, calculated and payable quarterly. A performance fee is payable for outperformance versus the benchmark, capped at 1% of net assets and paid 12 months in arrears. In H120, ongoing charges were 0.65% (H119: 0.62%), which was below the board’s target of 0.70%. Including performance fees, ongoing charges were 1.57% (H119: 0.79%).

Dividend policy and record

MNP pays quarterly dividends in July, October, January and April. Annual distributions have compounded at 1.0% pa over the last five years compared with 5.9% pa since the trust was launched in March 1999 (they have increased or been maintained every year since then). The FY19 dividend of 4.2p per share (0.8x covered) was in line with the prior two financial years, and so far in respect of FY20 three interim dividends of 0.9p per share have been paid or declared, which are unchanged year-on-year.

In H120, revenue per share was 1.67p, 28% lower than 2.32p in H119, largely due to changes in the portfolio, with higher exposure to companies with lower but growing dividend yields, and a reduced weighting in lower-growth, higher dividend-paying firms. At end-H120, MNP had revenue reserves of £4.0m (c 1.2x the last annual dividend). The trust has a 1.4% dividend yield.

Peer group comparison

Exhibit 10: AIC Global sector at 13 December 2019*

% unless stated

Market
cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Discount
(ex-par)

Ongoing
charge

Perf.
fee

Net
gearing

Dividend
yield

Martin Currie Global Portfolio

244.9

24.0

44.7

92.5

214.4

(0.7)

0.7

Yes

100

1.4

Alliance Trust

2,691.8

15.4

41.8

82.1

179.9

(5.6)

0.6

No

105

1.7

AVI Global Trust

837.6

8.7

25.8

61.4

125.3

(7.8)

0.9

No

104

2.2

Bankers

1,184.4

16.2

39.8

82.8

200.2

0.4

0.5

No

100

2.1

Brunner

376.1

18.1

34.8

72.1

168.1

(7.8)

0.7

No

108

2.3

EP Global Opportunities

120.6

(1.0)

11.8

43.8

112.3

(5.7)

0.9

No

100

1.9

F&C Investment Trust

3,991.9

12.9

35.9

81.2

200.5

(0.8)

0.6

No

109

1.6

JPMorgan Elect Managed Growth

262.6

14.6

35.7

66.2

192.0

(3.3)

0.5

No

100

1.8

Lindsell Train

270.5

26.7

109.0

233.6

593.2

23.0

0.9

Yes

101

2.2

Majedie Investments

129.4

(5.7)

(4.2)

27.8

70.7

(13.8)

1.0

No

113

4.7

Manchester & London

162.2

14.7

68.1

129.8

103.3

(3.5)

0.8

No

100

2.7

Mid Wynd International Inv Trust

261.5

19.0

44.1

101.8

231.0

2.2

0.5

No

100

1.0

Monks

2,054.6

18.5

52.4

108.0

191.1

5.1

0.5

No

105

0.2

Scottish Investment Trust

614.4

5.8

14.8

54.0

133.8

(7.9)

0.4

No

102

3.0

Scottish Mortgage

7,628.5

12.0

80.6

135.7

404.3

(2.0)

0.4

No

108

0.6

Witan

1,931.7

13.5

32.2

72.9

192.6

(2.6)

0.8

Yes

112

2.2

Average (16 trusts)

1,422.7

13.3

41.7

90.3

207.0

(1.9)

0.7

104

2.0

MNP rank in peer group

13

2

5

6

4

5

8

11=

13

Source: Morningstar, Edison Investment Research. Note: *Performance data to 12 December 2019 based on ex-par NAV. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets (100 = ungeared).

MNP is one of 16 funds in the AIC Global sector; they follow a variety of investment mandates. Osmani explains that MNP differentiates itself by having a concentrated portfolio (32 positions at end-October 2019) of listed equities, with no unlisted or derivative exposure. He argues that while funds with unlisted or private equity holdings may have lower volatility of returns than MNP (as the valuations of such companies change infrequently), it does not mean they are lower risk; this has been emphasised by recent industry headlines regarding Woodford Investment Management.

The trust’s total returns – achieved without any gearing – are above-average over all periods shown, ranking second over the last 12 months, fifth over three years, sixth over five years and fourth over the last decade. However, it should be noted that the peer group averages over the medium and longer term are skewed by a few funds with outsized returns. MNP’s discount is below the peer group average, and its ongoing charge is in line with the mean, although the trust is one of three funds eligible for a performance fee. Unsurprisingly, given its focus on capital growth, MNP’s dividend yield is below average.

The board

There are five directors on MNP’s board, all of whom are non-executive and independent of the manager. The chairman is Neil Gaskell, who joined the board on 24 November 2011 and has been chairman since 22 May 2012. MNP’s four other board members and their dates of appointment are Gillian Watson (1 April 2013, senior independent director since 11 June 2019), Marian Glen and Gary Le Sueur (both 1 December 2016), and Christopher Metcalfe (19 September 2019).

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This report has been commissioned by Martin Currie Global Portfolio Trust and prepared and issued by Edison, in consideration of a fee payable by Martin Currie Global Portfolio Trust. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Martin Currie Global Portfolio Trust and prepared and issued by Edison, in consideration of a fee payable by Martin Currie Global Portfolio Trust. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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