Heavy selling by a major shareholder has caused Brunner to trade significantly below the true value of its portfolio
Thursday 28 Jan 2021 Author: Martin Gamble

There is a lot to like about Brunner Investment Trust, not least the discount to net asset value (NAV) which has blown out to 16.3% from 9.4% in October 2020, according to Winterflood data.

Part of the reason is down to the actions of one of its largest shareholders, Aviva Global Investors. Data from Refinitiv shows that Aviva has been busy selling, nearly halving its position since November 2020. It still  owns 9.9% but the discount has the potential to narrow once the overhang has run its course.

While Aviva’s selling has put pressure on Brunner’s share price, it does offer investors the chance to get heavily discounted exposure to some of the best quality companies in the world and a 2.4% dividend yield compared with 1.8% average for the peer group.

Managed by Matthew Tillett and Marcus Morris-Eyton, Brunner takes a more balanced view when searching for global opportunities rather than sticking to a pure value or growth style. Tillett focuses on finding reliable income while Morris-Eyton focuses on faster growth opportunities.

The portfolio isn’t skewed to either investment style, and it has faster growing companies trading on higher PE multiples as well as lower growth firms on cheaper multiples.

The common theme running through stock selection is quality with both managers looking to hold high quality companies with strong balance sheets and good cash generation.

The trust seeks out the best global opportunities for capital growth and reliable dividends, and gauges performance against a weighted benchmark composed of 70% of the FTSE World ex-UK index and 30% of the FTSE All-Share.

Over the last five years the net asset value and share price have gained 83% compared with 73% for the benchmark according to Refinitiv.

The trust is 46% exposed to the US, with Continental Europe comprising 28% and the UK at 18%. Asian companies comprise the rest of the portfolio.

The healthcare and industrial sectors account for around 20% each, with financials at 17% and technology at 13%, giving the portfolio decent exposure to ‘reflation’ prospects.

The largest holding is US software group Microsoft worth around 4.3% of the fund, followed by healthcare company UnitedHealth (3.8%), semiconductor company Taiwan Semiconductor (3.3%) and Swiss pharma group Roche (3%).

The trust has a very competitive 0.45% annual management charge and ongoing 0.66% charge which includes operational expenses.

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