Quality global portfolio available at a discount

The Brunner Investment Trust 1 February 2021 Review
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The Brunner Investment Trust

Quality global portfolio available at a discount

Investment trusts
Global equities

1 February 2021

Price

856.0p

Market cap

£366m

AUM

£446m

NAV*

991.2p

Discount to NAV

13.6%

NAV**

995.4p

Discount to NAV

14.0%

*Excluding income. **Including income. As at 28 January 2021.

Yield

2.3%

Ordinary shares in issue

42.7m

Code

BUT

Primary exchange

LSE

AIC sector

Global

Benchmark

Composite benchmark

Share price/discount performance

Three-year performance vs index

52-week high/low

920.0p

576.0p

1,040.4p

688.2p

*Including income.

Gearing

Net*

6.1%

*As at 31 December 2020.

Analysts

Mel Jenner

+44 (0)20 3077 5720

Sarah Godfrey

+44 (0)20 3681 2519

The Brunner Investment Trust is a research client of Edison Investment Research Limited

The Brunner Investment Trust (BUT) is managed by Matthew Tillett at Allianz Global Investors (AllianzGI), working alongside deputy managers Jeremy Kent and Marcus Morris-Eyton. All three have positive track records in other funds that they manage, and bring complementary skillsets to the table. Tillett highlights the trust’s quality bias and diverse income stream, which is less dependent on the UK than it used to be. This has been beneficial in 2020 as domestic dividend cuts have exceeded those in other markets, and has helped BUT extend its long-term record of outperformance, particularly versus the broad UK market.

NAV modestly ahead of the benchmark over a volatile 12 months to end-December 2020

Source: Refinitiv, Edison Investment Research

The market outlook

Much of the significant stock market rally following the Q120 coronavirus-led sell-off has been a function of multiple expansion (the forward-earnings multiple of the Datastream World Index is close to a 10-year high), as operating conditions for companies remain challenging. Hence, going forward, additional equity appreciation is likely to be more reliant on corporate earnings growth rather than a further revaluation.

Why consider investing in BUT?

BUT has a balanced portfolio of high-quality global equities offering the prospect of both capital appreciation and income growth.

BUT has a compelling performance record, with double-digit annual NAV and share price total returns over the past decade, while the trust’s NAV is ahead of its composite benchmark over the past one, three, five and 10 years.

BUT is on course for 49 years of consecutive annual dividend growth.

Scope for a narrower discount

BUT is currently trading at a 14.0% discount to cum-income NAV, which is wider than the 10.2% to 12.1% range of averages over the past one, three, five and 10 years. Given the trust’s long-term record of outperformance and the very smooth manager transition, arguably a narrower discount is warranted. BUT has increased its dividend for the past 48 consecutive years and currently offers a 2.3% yield.

Exhibit 1: Trust at a glance

Investment objective and fund background

Recent developments

The Brunner Investment Trust aims to provide growth in capital value and dividends over the long term through investing in a portfolio of UK and international securities. From 25 March 2008 to 21 March 2017, the benchmark was a composite of 50% All-Share and 50% All-World ex-UK Index (£). It is now a composite of 70% All-World ex-UK (£) and 30% All-Share Index.

19 January 2021: amendment to disclosure policy regarding share repurchases. Announcement will be made every time a share buy-back authority is renewed.

8 December 2020: former director Ian Barlow retired from the board.

2 October 2020: announcement of 4.67p per share third interim dividend (+0.2% year-on-year).

Forthcoming

Capital structure

Fund details

AGM

April 2021

Ongoing charges

0.66%

Group

Allianz Global Investors

Final results

February 2021

Net gearing

6.1%

Manager

Matthew Tillett

Year end

30 November

Annual mgmt fee

0.45%

Address

199 Bishopsgate
London, EC2M 3TY

Dividend paid

Jun, Sep, Dec, Mar

Performance fee

None

Launch date

January 1927

Trust life

Indefinite

Phone

+44 (0)800 389 4696

Continuation vote

None

Loan facilities

See page 9

Website

www.brunner.co.uk

Dividend policy and history (financial years)

Share buyback policy and history (financial years)

From FY14, dividends have been paid quarterly in June, September, December and March. Dividends are expected to rise over the long term and have increased for 48 consecutive years.

Renewed annually, the trust has authority to purchase up to 14.99% and allot up to 5% of issued share capital.

Shareholder base (as at 31 December 2020)

Portfolio exposure by geography (as at 31 December 2020)

Top 10 holdings (as at 31 December 2020)

Company

Country

Sector

Portfolio weight %

31 December 2020

31 December 2019*

Microsoft

US

Software & computer services

4.3

4.9

UnitedHealth

US

Healthcare equipment & services

3.8

3.5

Taiwan Semiconductor

Taiwan

Technology hardware & equipment

3.3

2.9

Roche

Switzerland

Pharmaceuticals & biotechnology

3.0

3.0

Accenture

US

Support services

2.9

2.7

Munich Re

Germany

Non-life insurance

2.9

3.2

Agilent Technologies

US

Electronic & electrical equipment

2.8

N/A

CooperCompanies

US

Healthcare equipment & services

2.8

2.3

Visa

US

Financial services

2.8

2.6

AbbVie

US

Pharmaceuticals & biotechnology

2.5

N/A

Top 10 (% of portfolio)

31.1

29.8

Source: The Brunner Investment Trust, Edison Investment Research, Morningstar. Note: *N/A where not in end-December 2019 top 10.

Market outlook: Earnings required to fuel further gains

While UK stocks have lagged partly due to the Brexit overhang, looking at the performance of global stocks (in sterling terms) in Exhibit 2, one may think ‘pandemic, what pandemic?’. The MSCI World Index has more than recovered its Q120 losses in the wake of the coronavirus outbreak, reaching new highs. Investors have been encouraged by governments’ swift and dramatic policy responses to protect their economies and more recently by positive trial data from a number of companies working to develop effective COVID-19 vaccines. There is a wide swathe of the market where corporate earnings are depressed due to the negative effects of coronavirus, meaning that a large part of the recovery in the global stock market has been due to revaluation rather than fundamental improvement.

As shown in the table below, the Datastream World Index is currently trading on a forward earnings multiple of 19.1x, which is close to a 10-year high and a 35% premium to the average over the past decade. Given this valuation backdrop, it would seem reasonable to suggest that another upward move in equity prices should be led by earnings growth rather than further multiple expansion.

Exhibit 2: Market performance and valuation

Performance of indices (past 10 years in £ terms)

Datastream World Index valuation metrics (at 29 January 2021)

 

Last

High

Low

10-year
average

Last as % of
average

P/E 12 months forward (x)

19.1

19.8

10.0

14.2

135

Price to book (x)

2.5

2.6

1.4

1.9

132

Dividend yield (%)

1.9

3.4

1.8

2.5

75

Return on equity (%)

7.3

13.4

7.3

11.0

66

Source: Refinitiv, Edison Investment Research

Fund profile: Balanced focus on growth and income

BUT is one of the oldest UK investment trusts, having launched in January 1927, and is listed on the Main Market of the London Stock Exchange. The Brunner family remains the trust’s largest shareholder (c 29%). Matthew Tillett has been lead manager since 13 May 2020, having been deputy manager since 2016. BUT also has two deputy managers, Jeremy Kent (global equity and environmental, social and governance (ESG) specialist) and Marcus Morris-Eyton (growth equity specialist). Kent will be leaving AllianzGI at the end of March 2021 to pursue other opportunities. His role as one of BUT’s deputy managers will be assumed by Christian Schneider, who is deputy CIO of the firm’s global growth team and will provide additional input on overseas stock selection. The trust aims to generate long-term growth in capital and income from a diversified portfolio of global equities, and measures its performance against a composite benchmark (70% World ex-UK index and 30% broad UK index, versus a 50:50 split until 21 March 2017). To mitigate risk, a maximum 10% of gross assets (at the time of investment) may be invested in a single holding, while the portfolio must contain at least 50 stocks. Gearing of up to 20% of NAV (at the time of borrowing) is permitted; at end-December 2020, net gearing was 6.1%.

The trust has a long-term record of dividend growth: its annual distribution has increased in each of the past 48 consecutive years, compounding at a rate higher than the level of UK inflation. Despite many companies cutting their dividends this year in response to the pandemic, BUT’s board has announced its intention to pay a modestly higher distribution in FY20, thereby securing a 49th consecutive year of growth.

The fund manager: Matthew Tillett and team

The manager’s view: Anticipating an income recovery

Tillett says that since the onset of COVID-19 and the subsequent worldwide containment policies, investors have been grappling with when and how the virus will be subdued. Until the recent good news about positive vaccine trials there had been a period of hope over the summer in 2020 as the number of cases came down, leading to optimism in Europe about opening up the economy. However, as the number of cases has ticked up, lockdowns have been reimposed.

The manager explains that before the vaccine news, stock market leadership was dominated by IT companies and other COVID-19 beneficiaries at the expense of more cyclical or structurally challenged businesses. However, there was a shift following the first positive vaccine trial results in the belief that the virus can be brought under control within a visible space of time. Tillett comments that ‘the rotation within the stock market was very sharp and rapid. Sectors that had been depressed rallied hard, such as travel and leisure, banks and cyclicals.’ However, the manager suggests that the vaccine announcements do not justify the scale of the market move. He stresses that BUT has a long-term focus, and while he had been anticipating an event that would alleviate the pandemic issue, the question from an investor’s perspective is ‘where to from here?’ Tillett says that the vaccine news is ‘a light at the end of the tunnel from an economic perspective’. He comments that the stock market is looking towards an economic recovery, which he expects to happen, although ‘how the market will behave is a different issue,’ he adds. The manager says that following the rotation, the market leadership positioning is no longer as extreme; ‘it had gone too far towards the consistent high growth firms and COVID-19 beneficiaries and is now more balanced’.

Tillett explains that while the economic environment has been tough due to the global pandemic, there has not been a dramatic change in the shape of BUT’s balanced portfolio. He tries not to take extreme views on the macro outlook or on value versus growth strategies, but has maintained the trust’s quality bias. Rather than trying to determine the shape of the economic recovery, the manager has been focusing on the behavioural changes that have happened due to the lockdowns. ‘Some businesses will bounce back, but others may not. Determining the long-term winning companies is more important than trying to forecast the level of GDP growth,’ he opines.

Commenting on messages from recent company meetings, Tillett says that comparing the impacts of the first lockdown in March/April and now, ‘firms are better at adapting to new ways of working’. There were initially many restrictions within the economy and businesses that were negatively affected first time round are operating better now. ‘Companies have had experiments forced upon them, such as employees working from home, but while firms are still learning new ways of working, they could ultimately turn out to be more efficient, with higher profitability than pre-COVID,’ he suggests. The manager reports that digitalisation is evident, not just at pure-play internet and ecommerce companies, citing Adidas as an example; ‘companies that have invested heavily in digitalisation are now reaping the benefits and results are coming in ahead of expectations’. Tillett believes that these advantages will endure, as customers that have converted to online purchasing are likely to be ‘sticky’.

In regard to income, the manager says the picture has improved meaningfully in recent months both for BUT and the wider market. ‘We are now seeing the reintroduction of dividends by cyclical companies affected by the first lockdown, but which are now seeing business conditions improve, such as those related to the housing market.’ Tillett suggests that firms are more confident now about their trading environments and are able to give sales and earnings guidance. He expects an income recovery in 2021 and 2022 as economies most negatively affected by the virus reopen.

Asset allocation

Investment process: Fundamental stock selection

Manager Tillett and deputy managers Kent and Morris-Eyton aim to generate long-term capital growth and a growing level of income from a portfolio of global equities that is diversified by geography and sector. They have a range of complementary skills: Tillett has an income and value mindset, Morris-Eyton has a background of investing in growth stocks, while Kent has global equity and ESG experience. BUT’s portfolio of 60–80 stocks, where c 85% is invested in companies with market caps greater than $10bn, is selected from an investible universe of c 6,000 securities. Positions may be sold if there is a change in the investment case, on valuation grounds or if a better opportunity is identified. Portfolio turnover is c 20% pa, implying around a five-year holding period.

The managers employ AllianzGI’s stock selection process, which is based on three pillars:

Quality – seeking companies with stable or improving, above-average returns (key features are long-term competitive advantages, operating in a business with high barriers to entry, strong balance sheets, well-respected management teams and sound ESG credentials).

Growth – looking for firms experiencing long-term secular growth, while avoiding those in structural decline.

Valuation – a range of methods is employed, focusing on companies that are trading at a discount to their intrinsic value, not just assessing how ‘cheap’ a company is.

AllianzGI’s investment team is very well resourced, and along with portfolio managers and analysts focusing on fundamental research includes ESG specialists, the proprietary Grassroots market research platform and online discussion platform Salesforce Chatter.

ESG is an increasingly important factor in the research process and every stock researched is considered in terms of its credentials. If the managers are considering initiating a position in a company with a low ESG rating, they need to understand the issues and be able to justify the purchase (some low ratings relate to a lack of disclosure rather than bad behaviour). Tillett highlights a couple of recent engagements with companies. A discussion was had with oil major Royal Dutch Shell after it cut its dividend by two-thirds, as the manager was concerned about the lack of explanation and articulation of the company’s capital allocation framework. Another meeting was with the chairman of specialist staffing firm SThree to discuss its strategy under a relatively new CEO along with a range of ESG issues.

Current portfolio positioning

Exhibit 3: Portfolio geographic exposure vs benchmark (% unless stated)

Portfolio end-
Dec 2020

Portfolio end-
Dec 2019

Change
(pp)

Benchmark
weight

Active weight
vs b’mark (pp)

Trust weight/
b’mark weight (x)

North America

46.4

44.0

2.4

42.5

3.9

1.1

Europe ex-UK

28.0

23.6

4.4

9.9

18.1

2.8

UK

17.7

24.4

(6.7)

30.0

(12.3)

0.6

Pacific ex-Japan

5.2

5.4

(0.2)

10.5

(5.3)

0.5

Japan

2.7

2.7

0.0

5.4

(2.7)

0.5

Latin America

0.0

0.0

0.0

0.7

(0.7)

0.0

Middle East & Africa

0.0

0.0

0.0

0.9

(0.9)

0.0

100.0

100.0

100.0

Source: The Brunner Investment Trust, Edison Investment Research. Note: Excludes cash. Numbers subject to rounding.

At end-December 2020, BUT’s top 10 holdings made up 31.1% of the portfolio, which was broadly in line with 29.8% a year earlier; eight positions were common to both periods. In geographic terms, the trust’s UK exposure continues to decline (-6.7pp year-on-year and -12.3pp versus the composite benchmark), while the weightings in continental Europe and North America have increased by 4.4pp and 2.4pp respectively. Europe remains the largest overweight position versus the benchmark (+18.1pp).

Exhibit 4: Portfolio sector exposure vs benchmark (% unless stated)

Portfolio end-
Dec 2020

Portfolio end-
Dec 2019

Change
(pp)

Benchmark
weight

Active weight
vs b’mark (pp)

Trust weight/
b’mark weight (x)

Healthcare

20.9

15.5

5.4

10.6

10.3

2.0

Industrials

19.7

22.4

(2.7)

12.8

6.9

1.5

Financials

17.4

22.7

(5.3)

20.3

(2.9)

0.9

Technology

13.4

12.2

1.2

16.2

(2.8)

0.8

Consumer goods

10.8

9.2

1.6

12.9

(2.1)

0.8

Consumer services

5.4

7.2

(1.8)

12.5

(7.1)

0.4

Utilities

4.8

2.7

2.1

2.9

1.9

1.7

Basic materials

4.3

5.0

(0.7)

5.4

(1.1)

0.8

Oil & gas

2.8

2.4

0.4

4.3

(1.5)

0.7

Telecommunications

0.5

0.7

(0.2)

2.2

(1.7)

0.2

100.0

100.0

100.0

Source: The Brunner Investment Trust, Edison Investment Research. Note: Excludes cash. Numbers subject to rounding.

BUT’s sector weightings at end-December 2020 are shown in Exhibit 4. Over the past 12 months the largest changes are a higher exposure to healthcare (+5.4pp) and a lower exposure to financials (5.3pp). The manager favours the healthcare and industrials sectors with overweight positions of 10.3pp and 6.9pp respectively versus the composite benchmark, while the largest underweight position is consumer services (-7.1pp).

The trust has a new holding in Danish healthcare company Novo Nordisk, a leader in diabetes care. This position was championed by Kent and Morris-Eyton as they hold this name in other funds that they manage. Tillet says Novo fits well in BUT’s portfolio given its defensive growth profile, market leadership and strong balance sheet. He explains that while the US diabetes market is maturing, there are plenty of growth opportunities elsewhere. Compared with some other therapeutic categories there are multiple products to manage diabetes, and patent clocks can be reset by adapting the products, thereby avoiding a patent cliff. Novo’s share price was a relative laggard during the Q420 stock market rotation, which provided an entry point for this new position.

In recent months other names added to the portfolio include CME, DCC and IG Group. US-listed CME is a global markets company and owns the world’s largest financial derivatives exchange. It is a highly rated company, whose shares pulled back as c 30% of its business is tied to the US treasury market. As interest rates declined, volatility was suppressed across the yield curve, meaning there was less demand for hedging of interest rate positions. The manager explains that the higher treasury issuance required to fund the US’s increased deficits (incurred because of COVID-19) should be beneficial to CME. Tillett says the company is a high-quality franchise and its business has monopolistic characteristics. A higher level of transactions on its platform means more liquidity, lower spreads and reduced costs, which benefits its customers, while access to their data allows CME to offer additional services such as post-trade analysis.

Irish company DCC is an international sales, marketing and support services group with a clear focus on performance and growth. It operates through four divisions: LPG (liquefied petroleum gas), retail & oil, technology and healthcare. The manager says that DCC is an example of a company with a management team that has a successful approach to capital allocation. The firm has a decentralised business model and resources are allocated astutely, with a sharp focus on return on capital. While companies with energy exposure have de-rated (partly due to ESG considerations), the manager views DCC’s energy operations as an opportunity rather than a risk.

UK-listed IG Group is a trading platform used by retail investors. Tillett highlights the heavy investment in its digital business and suggests the company has the best technology in the industry. He notes the firm’s high single-digit/low double-digit growth in metrics such as the number of customers, revenues, profits and dividends, and suggests that its quality characteristics are underappreciated. IG Group has successfully diversified part of its business away from the UK, which has accelerated following the appointment of an external CEO a few years ago

Positions sold from BUT’s portfolio in recent months include contract foodservice provider Compass Group (its business has been negatively affected by the pandemic and Tillett has concerns about the company’s longer-term growth and profit margin profile); publisher and events manager Informa (the manager is uncertain about the firm’s future business model due to structural pressures on business travel); and US industrial company Wabtec Corporation (a lower-conviction position whose acquisition strategy has proved to be problematic).

Performance: Long-term record of outperformance

Exhibit 5: Five-year discrete performance data

12 months ending

Share price
(%)

NAV*
(%)

Benchmark**
(%)

CBOE UK All Companies (%)

MSCI All World exUK (%)

31/12/16

17.1

23.9

23.4

16.5

29.4

31/12/17

30.6

18.1

13.5

14.0

13.3

31/12/18

(8.2)

(7.1)

(5.3)

(9.8)

(3.6)

31/12/19

34.4

25.5

21.3

19.3

22.0

31/12/20

(3.1)

6.7

6.5

(10.9)

14.3

Source: Refinitiv. Note: All % on a total return basis in pounds sterling. *NAV with debt at market value. **Until 21 March 2017, benchmark was 50% All-Share and 50% All-World ex-UK index. From 22 March 2017, benchmark is 70% All-World ex-UK and 30% All-Share index.

Exhibit 6: Investment trust performance to 31 December 2020

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.

BUT has delivered double-digit annual total returns over the past decade (10.3% pa in NAV terms and 10.5% pa in share price terms; Exhibit 6, RHS). The trust’s relative returns are shown in Exhibit 7; its NAV is ahead of the benchmark over all periods shown. It is notable how well BUT has performed versus the broad UK market, illustrating the potential benefits of investing overseas.

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 benchmark

(0.5)

5.9

2.4

(9.0)

(2.2)

6.8

13.6

NAV relative to benchmark

0.0

2.1

1.3

0.2

1.8

6.4

10.9

Price relative to CBOE UK All Companies

(1.3)

3.0

5.2

8.7

24.7

43.6

58.7

NAV relative to CBOE UK All Companies

(0.8)

(0.7)

4.1

19.8

29.8

43.0

55.0

Price relative to MSCI All World ex-UK

(0.1)

7.3

1.5

(15.2)

(11.0)

(7.2)

(3.8)

NAV relative to MSCI All World ex-UK

0.5

3.4

0.4

(6.6)

(7.4)

(7.5)

(6.1)

Source: Refinitiv, Edison Investment Research. Note: Data to end-December 2020. Geometric calculation.

Tillett says that BUT’s performance in 2020 shows what the trust’s balanced approach is all about: ‘there were huge market swings in absolute and relative terms on the back of positive and negative news flow, yet BUT’s performance was steady’. The trust outperformed during the onset of COVID-19 and the first lockdown as the market was led by growth and healthcare names, such as Agilent, Microsoft and Visa. The manager explains that more recently, BUT also performed well following the positive vaccine news, illustrating the importance of running a balanced portfolio with stock picking driving returns. Positive contributors to performance include attractively valued UK housebuilder Redrow, which has an entrepreneurial culture and is confident that its business is recovering in the current tough economic environment. The company recently reported results that were ahead of expectations and Tillett expects the firm to reinstate its dividend. The shares in US travel- and leisure-related business Booking Holdings (owner of Booking.com) have rallied following the vaccine news and are now above pre-COVID-19 levels. The company has a structural advantage through its online operations and has a dominant market share.

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

Source: Refinitiv, Edison Investment Research

Discount: Scope for a higher valuation

BUT’s current 14.0% share price discount to cum-income NAV compares with a 12-month range of a decade-high 3.5% premium on 17 April 2020 to a three-year wide 19.3% discount on 8 October 2020. It is wider than the average discounts of 11.2%, 10.2%, 11.8% and 12.1% over the past one, three, five and 10 years respectively. One could argue that BUT deserves a higher valuation given its positive long-term performance record and AllianzGI’s well-resourced investment team. The manager transition has been very smooth as Tillett had worked with former manager Macdonald for a number of years.

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

Source: Refinitiv, Edison Investment Research

Capital structure and fees

BUT is a conventional investment trust with 42.7m ordinary shares in issue. Following the repayment of two high-cost (11.125% and 9.25%) debentures in 2018, the trust’s capital structure has improved significantly. It now has £25m of fixed-rate 30-year 2.84% loan notes, a £10m short-term revolving credit facility (RCF) and £0.5m of 5% cumulative preference shares. At end-December 2020, BUT’s net gearing was 6.1%.

AllianzGI is paid an annual management fee of 0.45% of net assets minus short-term liabilities, excluding any funds managed by AllianzGI. In FY19, ongoing charges were 0.66% (FY18: 0.66%).

Dividend policy and record

BUT has a distinguished dividend history; its annual distributions have increased for the past 48 consecutive years, at an average rate above the level of UK inflation. At the end of H120, after allowing for the payment of the first and second interim dividends, the trust had revenue reserves of 27.6p per share, which is c 1.4x the FY19 total distribution. So far in FY20, BUT’s board has declared three interim dividends of 4.67p per share (+0.21% year-on-year) and anticipates an unchanged final dividend of 6.00p per share. This equates to a total FY20 dividend of 20.01p per share (+0.15% year-on-year). Based on its current share price, BUT offers a 2.3% dividend yield.

Peer group comparison

BUT is a member of the 15-strong AIC Global sector. Tillett thinks that the peer group is ‘crowded’, with a selection of very large and much smaller funds running different strategies, so a direct comparison is not easy. He suggests BUT’s portfolio, which is balanced between growth and income, is a distinctive feature, as is its composite benchmark; the manager believes that the trust ‘works well for smaller wealth managers and the retail platforms’. BUT’s NAV total returns are below average over the periods shown, ranking 13th over one year, 12th over three years, and 11th over five and 10 years. At 29 January, the trust had the second-widest discount, its ongoing charge was in line with the mean, while its gearing was higher than average. BUT offers an above-average dividend yield, ranking fifth and 50bp higher than the mean.

Exhibit 10: AIC Global sector at 29 January 2021*

% unless stated

Market
cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Discount
(cum-fair)

Ongoing charge

Perf.
fee

Net gearing

Dividend yield

Brunner

365.4

5.4

20.7

90.6

152.8

(11.9)

0.7

No

106

2.3

Alliance Trust

2,786.3

7.2

22.8

97.6

164.7

(5.1)

0.6

No

107

1.7

AVI Global Trust

899.0

13.5

22.7

113.6

121.2

(9.6)

0.9

No

104

1.9

Bankers

1,400.2

9.9

27.4

105.8

190.5

1.8

0.5

No

101

2.0

EP Global Opportunities

107.8

(0.8)

(3.8)

50.2

92.4

(8.7)

1.0

No

100

2.1

F&C Investment Trust

4,087.0

11.1

27.6

102.1

191.3

(6.8)

0.5

No

108

1.5

JPMorgan Elect Managed Growth

267.9

7.3

21.9

80.5

159.3

(3.6)

0.5

No

100

1.8

Lindsell Train

263.0

14.3

74.0

222.3

587.6

11.0

0.8

Yes

100

3.1

Manchester & London

235.1

13.2

45.9

161.1

101.0

(12.3)

0.8

No

100

2.4

Martin Currie Global Portfolio

313.6

18.0

54.2

134.4

239.2

3.6

0.6

No

109

1.1

Mid Wynd International Inv Trust

404.9

19.3

46.8

132.1

220.7

2.1

0.7

No

100

0.9

Monks

3,124.6

40.6

67.6

210.0

252.7

2.9

0.5

No

102

0.2

Scottish Investment Trust

492.7

(8.5)

(8.3)

43.4

83.0

(8.5)

0.5

No

104

3.3

Scottish Mortgage

18,074.9

115.2

178.9

438.4

801.4

0.5

0.4

No

104

0.3

Witan

1,761.5

6.3

15.2

82.7

160.3

(5.0)

0.8

Yes

113

2.4

Average (15 funds)

2,305.6

18.1

40.9

137.7

234.5

(3.3)

0.7

104

1.8

BUT rank in sector

10

13

12

11

11

14

7

5

5

Source: Morningstar, Edison Investment Research. Note: *Performance to 28 January 2021 based on ex-par NAV. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets.

The board

Following the retirement of Ian Barlow on 8 December 2020, BUT’s board currently has five independent, non-executive directors. It aims to have two investment professionals, an accountant, a lawyer and a director with commercial expertise, with a connection to the Brunner family, in order to provide a balanced line-up. Carolan Dobson joined the board in December 2013 and assumed the role of chairman in March 2016. Peter Maynard was appointed in October 2010, Jim Sharp in January 2014 (he is connected to the Brunner family by marriage), Amanda Aldridge in December 2019 and Andrew Hutton in April 2020.

General disclaimer and copyright

This report has been commissioned by The Brunner Investment Trust and prepared and issued by Edison, in consideration of a fee payable by The Brunner Investment 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 2020 Edison Investment Research Limited (Edison).

Australia

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

1185 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

1185 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 The Brunner Investment Trust and prepared and issued by Edison, in consideration of a fee payable by The Brunner Investment 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 2020 Edison Investment Research Limited (Edison).

Australia

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

1185 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

1185 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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