How a ‘forgotten’ Japan could play a large role in investment returns
Alex Illingworth, co-manager of the Mid Wynd International Investment Trust, talks to us about how...
Mid Wynd International
Investment trust
The Mid Wynd International Investment Trust looks to grow real wealth by investing in a portfolio of high-quality, global equities. Managed by the team at Artemis since 2014, the trust uses a thematic approach to portfolio construction with a strong sustainability focus running through the investment process.
Our opinion
Mid Wynd International Investment Trust is a core option for any investor looking for a conservatively managed offering that taps into a number of global trends. The team have proven their ability to build a portfolio which targets high quality stocks investing in long-term themes across the globe. The portfolio has been a consistently strong performer, whilst demonstrating lower volatility when compared to many of its peers.
Trust manager
UK-based Artemis was founded in 1997 as a limited liability partnership. Affiliated Managers Group (AMG) and the management team at Artemis own 100% of the equity of the business. This is a financial partnership; AMG takes a share of the revenues produced by Artemis but does not get involved in the day-to-day running of the business. A recipient of the Elite Provider for Equities rating in 2015, 2016, 2017, 2018 and 2020, Artemis has retained its manager-centric, innovative and supportive culture, which has helped it to attract and retain talented investors.
The trust is managed by Simon Edelsten and Alex Stanić. Simon joined Artemis in 2011 from Taube Hodson Stonex, and has also worked at Dresdner Kleinwort Benson and Phillips & Drew. He graduated from Trinity College, Oxford where he studied politics, philosophy and economics.
Alex joined Artemis in March 2023 and also manages the Artemis Global Select fund alongside Simon. He previously worked at River & Mercantile where he founded and headed up the global equities division in 2009, before moving on to JP Morgan. He has an MA in Economics and Social Geography from Edinburgh University.
Alex and I have been managing equity funds for so long now that we’ve experienced a past equivalent of most things the markets might throw at us, which guides us in how best to respond.
Simon EdelstenTrust manager
Investment board
The five-strong board is chaired by Russell Napier. A renowned author, financial historian and investment strategist, Russell has been a director of the company since 2009. He has previously worked for the likes of Baillie Gifford and Foreign & Colonial Emerging Markets. Since 1999 he has been a consultant global macro strategist advising institutional investors.
The remaining board members are David Kidd, Harry Morgan, Diana Dyer Bartlett and Alan Scott. The Scott family has been involved with the Mid Wynd business since its beginnings in 1797 – when the family bought a mill for their new textile business in Mid Wynd (the middle of three lanes) in Dundee.
Investment process
The managers begin with a ‘roadmap’ covering the global economy which helps them to identify stable drivers and growth themes in each area. This roadmap allows them to ascertain the likely shape of an industry in three to five years’ time. This analysis covers economic and social data, such as demographics, environment change or energy supply and demand. The aim is to identify longer term growth opportunities which are not dependent on benign economic conditions to succeed. The process allows them to focus on sectors with particular ‘tailwinds’ for the companies they select. The portfolio will tend to be relatively lowly exposed to more economically sensitive and cyclical parts of the market.
The Mid Wynd International Investment Trust is currently allocated across ten distinct themes (automation; sustainable consumer; online services; emerging markets consumer; scientific equipment; healthcare costs; screen time (computers); lower carbon world; high quality assets; and Fintech) with each one not only having a promising five-year growth trajectory but also including some of the best quality growth companies available.
The managers prefer companies with high and sustainable barriers to entry; management which can clearly explain deployment of cash; businesses not overly exposed to exogenous factors; management with a sustainable vision for their business; stable executive teams whose incentives are aligned with shareholders and invest in their own business; and high standards of governance, high audit quality and political risk.
Investments are made if the team believes the market is not recognising the long-term growth potential of a stock. The managers may have some investments with poor growth prospects, but which are trading at significant discounts to the value of their assets. The final portfolio comprises between 55-70 stocks.
The team also has an ESG framework embedded into the process. This leads to certain sectors being excluded (using a 10% revenue threshold) where poor sustainability standards are endemic. For example, currently the trust will not invest in the oil and gas sector, thermal coal, gambling, weapons production or tobacco.
ESG
ESG - Integrated
The assessment of environmental, social and governance factors is incorporated throughout this trust’s investment process – from thematic analysis to stock selection, portfolio construction and ongoing engagement and voting. The firm uses a 10 per cent revenue threshold to limit exposure to certain markets, with the firm seeking to exclude the likes of weapons, gambling, tobacco and thermal coal, oil & gas; instead it focuses on sustainable growth areas. The trust has been active with regards to voting activity in the past with a strong focus on pay disclosure; independence of boards and committees; and ESG disclosure (the trust is keen to support management and shareholder resolutions where additional ESG disclosure can protect/enhance shareholder value in the short and long-term).
Risk
Mid Wynd International Investment Trust is a relatively concentrated portfolio of 55-70 stocks. It has a strong investment process but performance is tied to the conviction of the managers in the long-term themes they are backing. The trust’s assets may be priced in currencies other than the trust’s base currency – changes in currency exchange rates can therefore affect the trust’s value. As a global portfolio, there may also be some emerging market risk.
Gearing
The trust may borrow up to 30% of its net assets and has a $60m USD multicurrency debt facility available.
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