Fund Research

Perpetual Income & Growth IT

Last update 22 March 2018

Perpetual Income & Growth (PLI) has a strong track record over the long term, delivering annualised NAV total returns in excess of 8.5% per annum over ten years. The trust has outperformed the FTSE All Share by a comfortable margin, performing particularly well in relative terms thanks to the manager’s conservative style during periods when momentum has been weak or negative.

Driven with a high conviction, cautious style, PLI has a clear emphasis on risk control, with lower beta than the average trust in the AIC UK Equity Income sector. The trust has much in common with its sister fund, Edinburgh Investment Trust. Both are managed with a benchmark agnostic approach that sees the manager take significant over and underweights versus the index, and both focus on large, cash generative companies which the manager believes are undervalued.

Unlike Edinburgh, however, PLI is also able to invest in small and unquoted companies, adding another level of flexibility that allows Mark to invest in companies which, while they may not pay a dividend ‘today’, have the potential to grow their dividend exponentially.

Despite the manager’s formidable reputation, the trust has been on the back foot in the last two years, suffering because it has no exposure to mining stocks (a position which had been to the trust’s benefit in 2014-15), HSBC or Royal Dutch Shell as they rallied in 2016-17 and significant exposure to domestically focused UK companies which were downgraded after the Brexit referendum and remain deeply unloved.

This weak patch of performance has seen the trust slip out to a significant discount of around 9%, despite a chunky yield of 4%...

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Fund History: Perpetual Income & Growth IT

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