Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by AVI Global. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
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Overview

AVI Global Trust (AGT) offers investors a portfolio of companies which trade at a discount to their own NAV, while offering opportunities to add value via active ownership. The team, led by manager Joe Bauernfreund, believe their holdings will generate superior returns either through a narrowing of their discount, often achieved by unlocking unrealised shareholder value through active engagement. However, first Joe aims to find companies which own high-quality underlying assets which should be able to offer attractive returns in themselves.

AGT’s portfolio can be broken down into three categories: closed-ended investment funds, family-backed holding companies, and asset backed special situations. We note that asset backed special situations primarily refers to Japanese equities, whose historically poor corporate governance and capital allocation opens up opportunities for effective engagement.

While AGT’s portfolio of discounted holdings does lend itself to being a ‘value’ style strategy, we highlight that the underlying portfolio contains a wide variety of different companies, including a number of more highly-valued names which sit firmly in the growth style, with Morningstar having assigned AGT a ‘core’ style as a result. We describe AGT’s process and holdings in more detail in the Portfolio section.

AGT has demonstrated a competitive return profile, beating the MSCI ACWI over the last five years. Yet, as we highlight in the Performance section, returns have been especially strong over the last 12 months, when it has been the best performing strategy within the AIC Global sector. This is in part the result of AGT’s quick rebound from the initial COVID-19 crash, as well as the team’s active positioning in economically sensitive companies. Despite AGT’s recent performance, it still trades on a 8.3% discount, wider than its peer-group average, although it has recently shown signs of narrowing. AGT estimates its current ‘double discount’ is 36% of NAV, reflecting the combination of AGT’s discount with that of its underlying holdings.

Kepler View

We think AGT offers investors a highly differentiated approach to global equities, with the focus on discount opportunities and active engagement something hard to find elsewhere. Such a process may be attractive to those looking for either a differentiated source of alpha, or those who are looking to diversify their more expensive growth positions. AGT’s highly idiosyncratic holdings can also offer stock-level diversification, as the underlying portfolio lacks many of the mega cap companies which dominate global equity markets.

We think AGT also presents a compelling near-term investment case, as many of its holdings demonstrate strong performance during market rebounds, whereby they tend to capitalise on economic recoveries due to the combination of discount reversal and NAV growth. As a result, if investors were to believe that the post-pandemic recovery still has longer to run then there may be an ongoing catalyst for AGT to sustain its top decile 12-month performance. The latter may also be the mechanism through which AGT’s discount is further narrowed, something we have already begun to see this year.

We also note that AGT’s active approach to investing not only leads to it having additional, long-term drivers underpinning many of its holdings’ performance (given the length of time it takes for engagement campaigns to be effective), but it also makes AGT an attractive choice for ESG conscious investors. AGT’s active engagement is the most onerous and arguably important ask of an ESG investor, and important in ensuring the wider market adheres to ESG principles.

bull bear
Offers an underlying portfolio of quality companies trading at intrinsic discounts Discounted portfolio can increase sensitivity to market downturns
Has demonstrated strong performance during post-COVID-19 crash Gearing can amplify losses on the downside (but also enhance gains on the upside)
Source of strong, stock level diversification, due to unique investment approach High KID RIY
Continue to Portfolio

Fund History

07 Apr 2022 Fund Analysis
AGT trades on an attractively wide discount, despite its long-term outperformance and potential capacity to rebound...
26 Jan 2022 Fight or flight...
Two of our analysts debate the impact that war in Ukraine could have on investors' portfolios...
30 Dec 2021 Great expectations
As the last of the mince pies wilts in the fridge, topped with a generous helping of stilton, the Kepler Trust Intelligence team stick a finger in the air and point toward their top picks for the year ahead…
14 Oct 2021 Fund Analysis
AGT has generated some of the best YTD returns in its sector, but its portfolio still trades on a 36% double discount…
19 Aug 2021 Pandemic immunity
We ask which global equity trusts have outperformed through the different stages of the pandemic…
02 Jun 2021 Fortune favours the brave (sometimes)
Our research suggests wide discounts often herald high NAV returns too…
19 May 2021 The complexity premium
We examine the idea that extra returns can be obtained from buying investments which are perceived to be more complex by most investors...
09 Apr 2021 Fund Analysis
AGT’s shares trade on a wide double discount to the portfolio’s underlying NAV…
20 Nov 2020 Fund Analysis
AVI Global has held up strongly throughout the uncertainty of 2020, outperforming the benchmark and taking advantage of depressed valuations…
18 Nov 2020 Results analysis: AVI Global
AVI Global has held up strongly throughout the uncertainty of 2020, outperforming the benchmark and taking advantage of depressed valuations…
08 Sep 2020 Wolf in sheep's clothing?
AVI Global’s growth characteristics shouldn’t be underestimated, yet it trades on a “double discount” of c. 45%...
16 Jun 2020 Factor performance and the COVID-19 effect
Will value continue to move into the black, or fade to red?
03 Jun 2020 Price is what you pay, value is what you get
The listed private equity sector has seen discounts widen markedly, but does this present an opportunity?
20 May 2020 Fund Analysis
AGT seeks companies with high-quality growth assets trading at a discount to fair value…
07 Apr 2020 Opportunity passed?
Discounts gapped out, but in many cases have rebounded…
20 Feb 2020 The return of the activist... but not as we know it.
Why the ‘20s will go down as the decade of the corporate activist...
12 Dec 2019 Fund Analysis
Focusing on accessing a diverse array of opportunities globally, AGT seeks companies with high-quality assets exhibiting growth and trading at a discount to fair value...
17 Jul 2019 Ready for action
In the second part of our active management series, we assess the most active managers across the major closed-ended equity sectors…
13 Jun 2019 Real growth in a world of fake news
Presentations and audio from our event at the London Stock Exchange, where six fund managers set out their stall for an exciting future...
07 May 2019 Fund Analysis
While AVI Global Trust is sitting on a wide discount, the recent sell-off has turned up a wave of new opportunities...
24 Dec 2018 Why did the chicken cross the road?
Because he was so bored of reading newspapers devoted entirely to Brexit he was hoping he’d be hit by a truck.
19 Sep 2018 Artificial Alpha
While there are some signs that we may be finally seeing the froth come off the growth-led market, we think investors need to be highly selective in choosing value strategies...
06 Sep 2018 Bullseye
The third arrow of Shinzo Abe's grand plan, corporate reform, puts undervalued Japanese equities in a very attractive position...
08 Aug 2018 Feeling giddy?
As valuations continue to soar, we consider a few equity trusts with different approaches to diversification and risk management...
08 Aug 2018 Fund Analysis
British Empire Trust has top quartile NAV returns in the global sector over three years...
27 Jun 2018 A winning combination
New research from Cass Business school helps explain why closed-ended funds have outperformed their open-ended peers in the major equity sectors since 2000...
23 Jan 2018 What lies beneath
Our analysis shows the majority of investors, besotted with the growth rally, are wholly unprepared for rising bond yields...
16 Jan 2018 Fund Analysis
A highly-active, benchmark agnostic portfolio of global equities that follows a value-orientated investment approach.
28 Jun 2017 Fund Analysis
21 May 2017 Brave new world
We ask the top managers in each sector, region and asset class where they see the opportunities in the months ahead...
22 Feb 2017 Into the wilderness
As the West heads deeper into uncharted territory, we examine the way in which global fund managers are positioning in the face of vertiginous valuations and seismic political change...
25 Jan 2017 A new dawn for value investing
After years in the wilderness, value investing is a making a comeback and our research suggests its outperformance will continue if bond yields keep rising...
16 Jan 2017 Fund Analysis
19 Apr 2016 Value investing makes a comeback
Equity strategists at JPMorgan Cazenove think value stocks could be back on top for the first time since the credit crunch.
26 Jan 2016 Buy with confidence
We employ a new technique to reveal five trusts on discounts which offer the cheapest entry point in a decade...
View all

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