Fund Profile

Edinburgh Investment Trust 25 October 2023

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Edinburgh Investment Trust. 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

For more than three years, James de Uphaugh and Chris Field have managed Edinburgh Investment Trust (EDIN). They’ve delivered strong results with a strategy of balancing stocks with above-average earnings potential with latent recovery stocks, all in order to deliver income and capital growth. They both recently announced their retirement and will hand the reins over to Imran Sattar in February 2024 (see Management section). The message behind the change is one of continuity, with Imran having worked with James and Chris for a number of years and taking a similar approach to management.

Over the last three years, James has invested predominantly in UK companies, with a small allocation to overseas businesses, to deliver long-term capital and income growth. He’s run a concentrated portfolio of 40-50 holdings, blending both income and growth opportunities, as well as targeting businesses with multiple drivers of returns over a cycle.

This strategy, which Imran intends to continue, has led to impressive results. EDIN’s NAV total returns have been ahead of the sector and index since March 2020 (see Performance section), driven largely by the manager’s astute stock selection. Imran believes there are some brilliant opportunities in the UK market currently and potentially amplified given some are sitting at more appealing valuations versus history.

EDIN yields 4.1% at the time of writing, and the managers report good growth prospects for the portfolio income in the medium term.

The trust has long-term, cheap structural debt, the board having refinanced it prior to last year’s rate hikes. Net gearing (with debt at fair value) was 4.2% as of the end of September 2023, and at the time of writing, EDIN’s discount is 9.7%, which is above the sector average.

Kepler View

In our view, EDIN’s flexible investment approach positions it well as a core holding for investors and should provide them with exposure to high-quality companies with good earnings growth that should deliver both capital and income returns. We think James and Chris have done an excellent job since taking over, so seeing the retirement of such seasoned management is disappointing. However, we are encouraged that their colleague Imran Sattar, another seasoned investor, will take over. Imran intends to stick to the same basic principles and is experienced in running money with a similar approach. The traits he seeks in each company are also similar to those preferred by James and Chris but given his investing track record, he may tilt slightly more— ‘tilt’ being the operative word—to growthier companies versus his predecessors (see Portfolio section).

While EDIN’s yield is not among the highest in the sector, we’d argue the prospects for income growth are favourable and should appeal to investors with a long-term time horizon. It’s possible that the yield being below the peer group average is responsible for the Discount being wider than the sector average. Therefore, we view the discount as highly attractive as a long-term entry point. Over time, we would expect sentiment towards UK equities to improve, while interest rates are cut and the yield on offer in safe assets falls. We think EDIN’s offer of income growth will seem more attractive over time, while the current portfolio has lots of growth potential too, particularly when the UK’s low valuations start to mean revert.

Bull

  • Managers apply a total return ethos, balancing income and capital growth
  • Low OCF offers investors low-cost access to UK equities
  • No dogmatic style bias could mean the trust won’t be as impacted in periods of sharp style rotations

Bear

  • Structural gearing can magnify losses in a falling market, as well as gains in rising ones
  • EDIN’s dividend is lower than the sector average
  • The UK market offers little exposure to certain high-growth sectors, like technology
Continue to Portfolio

Fund History

22 Jan 2025 A new Jerusalem
Dividend increases and share buybacks are good news for UK equities according to our analysts - who think those dark Satanic mills could deliver world-beating total returns...
02 Dec 2024 Fund Analysis
Strong stock selection across EDIN’s portfolio has been driving returns…
19 Nov 2024 Results analysis: Edinburgh Investment Trust
Companies across EDIN’s portfolio have been driving returns…
17 Jul 2024 Balancing act
We ask why trusts with a more flexible approach have outperformed…
24 Jun 2024 Fund Analysis
EDIN’s new manager is off to a strong start…
19 Jun 2024 None in, one out
We ask why companies are disappearing from public markets, and if it matters…
05 Jun 2024 Fast and FTSErious
With the FTSE 100 reaching record highs, is there still value on offer?
29 May 2024 Results analysis: Edinburgh Investment Trust
Stock selection has driven EDIN’s excess returns versus the FTSE All-Share…
22 Nov 2023 Results analysis: Edinburgh Investment Trust
EDIN continues to deliver impressive outperformance versus the FTSE All-Share…
25 Oct 2023 Fund Analysis
EDIN has delivered strong outperformance in its first three years under a new manager…
31 May 2023 Results analysis: Edinburgh Investment Trust
EDIN has delivered impressive outperformance since the new manager took over in March 2020…
24 May 2023 Five alternatives for income investors
Watch the presentations from our event focused on trusts delivering income via a diverse range of strategies…
16 May 2023 Edinburgh Investment Trust
James de Uphaugh
Rewatch this webinar from our online series in May 'Alternatives for income investors' hosted by the team at Kepler Trust Intelligence 15-19 May…
Watch Recording
30 Mar 2023 What I’m doing with my allowance this tax year
Two of our analysts debate whether to invest in punchier funds for the long term or take a more cautious view…
25 Nov 2022 Results analysis: Edinburgh Investment Trust
EDIN has outperformed over three years, doing particularly well under the new management team…
23 Nov 2022 Guns n’ roses
A sustainable future for the free world may depend on investments in weapons and oil as well as traditional ESG friendly assets…
16 Nov 2022 Bottom fishing
What can history tell investors about calling the bottom of a market?
01 Nov 2022 Fund Analysis
A new look, better-balanced EDIN portfolio has delivered strong performance…
31 May 2022 Five alternative trusts for income investors
Slides and audio from our event last week, featuring five trust managers discussing different strategies to deliver income for shareholders in challenging market conditions...
31 May 2022 Results analysis: Edinburgh Investment Trust
EDIN looks prepared to deliver during a tough economic period…
27 May 2022 Slides and Audio: Edinburgh Investment Trust
Download the presentation and listen to the audio from our 'Alternatives for income investors' virtual week from 26 May...
23 Feb 2022 Fund Analysis
EDIN looks leaner and meaner under its new manager and has outperformed since the takeover…
08 Jul 2021 London Calling
UK equities represent a ‘once in a generation’ opportunity according to the managers who joined us at our event last week…
07 Jul 2021 Slides and Audio: Edinburgh Investment Trust
Download the presentation and listen to the audio from our 'Cool Britannia' Summer conference on 01 July...
07 Jul 2021 Slides and Audio: Roundtable - The outlook for UK plc
Download the presentation and listen to the audio from our first roundtable discussion with James Henderson, James de Uphaugh and Rory Bateman...
23 Jun 2021 Time to back Britain?
After a challenging period for the United Kingdom, we wonder if it could be the most exciting market on a five-year view…
13 Apr 2021 Fund Analysis
EDIN’s new management team continue to identify individual stock opportunities in the UK..
10 Mar 2020 Kepler Spring Conference: presentations and audio
Audio and presentations from our spring conference at The May Fair Hotel last week…
08 Aug 2019 Mark Barnett: Q&A
Invesco's Head of UK Equities Mark Barnett talks through his outlook for the UK economy...
30 Jan 2019 The Income Portfolio
We reveal our investment trust picks for a mixture of income and capital growth...
16 Oct 2018 The Investment Trust Advantage
Our recent conference for discretionary fund managers saw some of the UK's leading fund managers discussing the outlook for the world's major regions and asset classes...
03 Oct 2018 We can be heroes
Our analysis has uncovered the trusts which have generated a solid income through thick and thin - without compromising other aspects of performance...
26 Jul 2018 Fund Analysis
A large UK focused investment trust with a strong long-term record trading on a deep discount thanks to an out-of-favour style...
26 Jul 2018 Mark Barnett: Finding opportunity in financials...
Mark Barnett highlights the UK’s alternative finance market, which has caused disruption to the traditional forms of credit since the Great Financial Crisis...
25 Jul 2018 The Bulletproof Income Portfolio
Our Bulletproof Income Portfolio was set up to illustrate the benefits of investment trusts in providing a stable income...
25 Jul 2018 The Endurance Growth Portfolio
The purpose of the Endurance Growth Portfolio is to generate long-term capital growth with a bias towards quality and defensive characteristics...
23 May 2018 Causing disruption: tobacco and the next generation
Mark Barnett explores the impact of next generation products on the tobacco industry...
11 Apr 2018 Mark Barnett: A stock-pickers approach to managing the macro
Invesco Perpetual's Head of UK Equities gives his upbeat view on Brexit, discusses the trajectory of interest rates, and outlines the investment ideas he sees in this environment...
22 Nov 2017 A stock picker’s approach to managing the macro
Mark Barnett, Head of UK Equities at Invesco Perpetual, discusses the risks and opportunities facing the UK Equity market
24 May 2017 Fund Analysis
22 Feb 2017 Fund Analysis
21 Feb 2017 Digging in
The Bulletproof Income Portfolio enters 2017 with increased dividend cover at a time when a defensive income seems more precious than ever...
20 Apr 2016 Mark Barnett: Two distinct routes to a sustainable income
Contrasting portfolio construction of The Edinburgh Investment Trust plc and Perpetual Income and Growth Investment Trust plc offers choice to income-seeking investors
26 Jan 2016 Top picks from four leading brokers for 2016
We examine the key recommendations for individual trusts from our panel of the City’s leading analysts.
26 Jan 2016 Dodging bullets
The Bulletproof Income Portfolio performed well in a turbulent 2015, the perfect year to test its strengths...
01 Dec 2015 Model Portfolio update: Empiric, Edinburgh and RIT Cap...
The latest insight into developments across our three model portfolios...
05 Jun 2015 Fund Analysis
05 Jun 2015 The Bulletproof Income Portfolio
Six investment trusts with income credentials to die for.
View all

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