Martin Currie Global Portfolio (MNP) follows a concentrated, highly active approach to global equity investing. Under the management of Zehrid Osmani, MNP follows a conviction approach, not only utilising a detailed approach to stock selection but also following a complex diversification process. Zehrid accounts for more than a company’s risk/return profile when constructing MNP whereby he also diversifies his exposure to a number of less conventional factors, such as end market exposure type and thematic trends. Thematic trends are also a key element in how Zehrid identifies potential opportunities, with MNP’s current trends broadly categorised between: Demographic changes, Future of technology, and Resource scarcity.
MNP has managed to outperform both its benchmark and its peer group average, with MNP ranking as fourth amongst global peers since Zehrid took over approaching three years ago. As we outline in the performance section, MNP’s performance has also been accompanied by strong risk statistics, the result of the strategy’s lower volatility and market sensitivity, as opposed to just its strong returns.
ESG also plays a huge role in Zehrid’s process, with MNP receiving strong ratings from ESG data providers. Zehrid uses an extremely detailed ESG process, described in detail in our ESG section, where over 70 individual ESG risk factors are analysed for each company, using a proprietary risk process.
MNP’s share price continues to trade tightly around its NAV, a result of the boards ‘zero discount’ policy, where they proactively intervene to control it. MNP also utilises structural gearing, adopted by the board relatively recently, as well as having adopted a new charging structure, to reduce costs as the trust grows.
We believe MNP offers investors a compelling ‘quality growth’ proposition with Zehrid continuing to invest in the same disciplined manner as he has done over the past three years. With hindsight this has served him well, as his commitment to quality growth allowed MNP to outperform throughout multiple phases of the pandemic. In our view MNP might not only be attractive to investors seeking ‘quality growth’ exposure, but also to those looking to diversify a pre-existing global portfolio, as MNP contains few of the mega-cap tech names that often characterise passive global exposures, not to mention its historic lower market sensitivity. However, MNP is concentrated into a small set of sectors, which investors may need to account for in their overall allocation. This is a conscious decision by Zehrid, who prefers to focus on Consumer, Industrials and Technology stocks, given his belief that they create superior value for shareholders over the long term. MNP’s very strong ESG credentials also make it a potential solution for sustainably-minded investors seeking to add global equity exposure.
If the current market continues to be supportive of stock specific factors rather than trend following, we believe that the environment may continue to be conducive to MNP’s performance, given the manager’s focus on bottom-up stock picking. Likewise, another surge in COVID-19 infections may lead to another ‘flight-to-quality’, which may also support the ‘quality’ companies within MNP’s portfolio. However, if we are able to successfully navigate the delta variant, it may lead to another value rally, a scenario in which MNP has underperformed previously. We also note that MNP’s ‘zero discount’ policy means investors are unlikely to find discount opportunities in which to buy into the trust, even if the latter scenario plays out.
|Disciplined and nuanced approach to 'quality growth' investing||Gearing can amplify losses|
|Strongest ESG credentials of any investment global equity trust||Quality growth bias can under-perform during rotations into value stocks|
|Has outperformed during the majority of the pandemic phases||High, but intentional, sectoral concentration may diminish diversification for certain investor types|