Five trusts on an attractive discount
Over the past few years, multi-asset managers have increasingly turned to investment trusts as a way...
There are many traditional ways to mark Scottish poet Robert Burns’ birth (donning a kilt, pouring a wee dram and belting out your best rendition of Auld Lang Syne, to name but a few) but, here at FundCalibre, we are unafraid to break with convention.
Seeing as we are more knowledgeable about investing than we are playing the bagpipes or knocking up some hearty cuisine, here are four Scottish-based funds which we think should stand investors in good stead over the long term.
First up is Thomas Moore’s £1.3bn income fund, which will hold a concentrated and completely benchmark-agnostic portfolio of between 30 and 60 stocks at any one time.
Like most fund managers at Standard Life Investments (SLI), Thomas uses an initial quant screen called ‘the matrix’ to single out the high-quality companies. From here, he focuses on individual companies’ ability to grow their earnings and increase their dividends.
SLI’s Focus on Change’ investment philosophy also underpins the fund‘s process, which leads Thomas to buy into stocks that are undergoing periods of structural change and have therefore been undervalued by the broader market. This means he tends to avoid many of the traditional income-paying stalwarts that some of his UK equity income peers have crowded into.
Swapping neeps and tatties for tacos and tamales, Aberdeen’s Latin American Equity fund could serve to spice up investors’ portfolios as a satellite holding, given that it specialises in a volatile area of the market.
The £219m fund is managed using a team-based approach and, in a bid to mitigate the turbulence that can come with investing in Latin American equities, they focus on high-quality names and targeting absolute returns rather than relative returns.
The portfolio is concentrated and consists of approximately 40 holdings, but these are chosen using an extensive stock selection process which involves directly visiting management teams, as well as focusing on recurring earnings growth, strong balance sheets and past treatments of minority shareholders.
Of course, our list would not be complete without the aptly-named Scottish Mortgage Investment Trust, which is headed up by James Anderson and deputy-managed by Tom Slater.
The managers look to generate high levels of growth and, in order to do so, they are not afraid to take punchy bets or buy into companies which may be volatile on a day-to-day basis but should thrive over the long term.
James and Tom have a marked focus on global companies which are disrupters in their respective industries, which tends to mean the portfolio is overweight the technology sector.
Last but not least, Iain Buckle and Audrey Ryan’s multi-asset portfolio aims to provide income and long-term growth through a combination of bonds, cash and UK equities (of which it can hold between 20% to 60% in at any one time).
The £581m fund has a highly-diversified portfolio – which tends to consist of more than 200 holdings at any one time – in order to smooth returns and minimise any potential drawdowns.
It also abides by Kames’ strict ethical screening process, which removes approximately 35% of the FTSE 100 index from the managers’ investable universe. Sectors in which Iain and Audrey are currently finding the best opportunities include industrials and financials.