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BMO Managed Portfolio has both growth and income portfolios based on a collection of close-ended funds

Many investment trusts are diversified products, typically with portfolios made up of up to 100 individual companies. A trust which invests in other investment trusts arguably takes this to another level, potentially providing exposure to thousands of underlying investments.

You get a professional insight into the prospects and performance of a variety of funds by watching the purchases and divestments by the manager of a trust-of-trusts.One such vehicle in this universe is the BMO Managed Portfolio trust, until recently known as the F&C Managed Portfolio Trust. This has both an income – BMO Managed Portfolio Income (BMPI) – and growth – BMO Managed Portfolio Growth (BMPG) share – underpinned by two separate underlying portfolios of around 40 close-ended funds.


The trust now provides investors with a facility to shift from the growth to the income portfolio, which has a yield of more than 4% and pays a quarterly dividend, and vice versa.

For example, if you were nearing retirement and needed more income from your investment pot you could move funds to the income version from the growth shares which pay no dividend.

Manager Peter Hewitt has steered the trust since its inception in 2008. The performance has been decent with returns of 110.8% for the income portfolio and 102.5% in the growth portfolio through to the end of October 2018 against 85.8% for their shared benchmark, the FTSE All-Share.

The discrete performance shows the trust has only lost money in three of its financial years running to 31 May 2018, namely 2016, 2012 and, unsurprisingly, 2009 when the market was settling at its most recent low point. The ongoing charge is a little over 1%.


Hewitt says a proactive approach has helped prevent the shares from languishing at a discount to net asset value. ‘If you make clear to the market you will buy shares and keep on buying, the market, and market makers, get the message.’

Hewitt says that when it comes to acquiring trusts for the fund, buying at a discount is ‘nice’ but it is far from the most crucial factor. ‘Getting the right underlying assets is much more important.’

Long-held constituents of the growth portfolio include a selection of technology-focused trusts including Allianz Technology Trust (ATT) and Scottish Mortgage (SMT).

Another is life sciences fund Syncona (SYNC), effectively spun out of the Wellcome Trust’s investment arm, which Hewitt describes as a ‘fantastic vehicle’ although he recently top sliced his holding.

On the income side trusts like Bankers (BNKR) and Law Debenture (LWDB) have been held since inception.


Recent investments in Hewitt’s growth portfolio include Baillie Gifford UK Growth (BGUK), Aurora Investment Trust (ARR), which has a value-based investment approach, and
newly-launched emerging markets fund Mobius Investment Trust (MMIT).

‘We like the team from their time running the Templeton Emerging Markets trust,’ says Hewitt on Mobius. ‘Emerging markets are under the cosh, so it seemed like a good time to invest and the people behind it have a lot of their own cash invested.’ Hewitt recently sold Genesis Emerging Markets (GSS).

Capital preservation trusts like Personal Assets Trust (PNL) and Ruffer (RICA) have also joined the top 10 holdings in the growth portfolio as Hewitt reacts to the uncertain market backdrop.

Interestingly one of the trusts Hewitt continues to hold in the growth fund is Woodford Patient Capital (WPCT).

Joking that he should have ‘taken a closer look at the name’, he acknowledges getting in at the IPO was a ‘rubbish decision’ in hindsight with the shares at 87.5p trading some way below the 100p issue price. But, he argues, there are some ‘really interesting companies in the portfolio’.

On the income side Hewitt recently picked up stock in song royalty trust Hipgnosis Song (SONG), and he sold BlackRock Commodities Income (BRCI) and infrastructure fund HICL (HICL).

For 2019 Hewitt plans no further reductions in his UK exposure given the relative value offered by the market and he continues to favour trusts which are exposed to secular growth themes like biotechnology, technology and healthcare. (TS)

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