Martin Currie Global Portfolio 04 September 2019

Martin Currie Global Portfolio Trust (MNP) aims to achieve long-term outperformance of the FTSE World Index from a portfolio of 25-40 high-growth companies from around the world.

Zehrid Osmani is at the helm of the portfolio, having joined the team in June 2018 and taking sole management of the portfolio in October 2018, and is constantly striving to identify undervalued, high-quality companies that can offer investors consistent returns. The process is built around a proprietary ‘toolkit’, where financial models, qualitative and thematic research are utilised to narrow the universe of around 3000 companies down to 500. After this, more detailed analysis is conducted, with Zehrid and his team identifying companies that generate high returns on their capital, have attractive growth profiles and have the potential to sustain or further improve it.

Since his appointment, Zehrid has been given greater flexibility in his investment decisions, increasing his allocation to high-growth companies and the portfolio’s concentration. It now consists of 33 holdings, in comparison to the average trust in the AIC Global sector has 127 holdings.

In performance terms, MNP has long been one of the stand out performers in the Global sector. Tom Walker was at the helm of the portfolio since the launch of the trust in 1999 and during his tenure delivered NAV total returns of 9.52% p.a., outperforming the FTSE World Index, which returned 8.9% p.a. over the same period. Zehrid has been able to do even better during his short time in charge of the portfolio: he has delivered 17.2% returns since July 2018, considerably more than the benchmark FTSE World (11%) and almost triple the AIC peer group which delivered 5.5% on average. Over this period, only Nick Train of Lindsell Train, has generated greater levels of alpha relative to their Morningstar best fit benchmarks, however MNP has done so at lower levels of volatility.

In July 2013 a zero-discount policy was introduced and since then the trust has predominantly traded at or around par. Throughout 2018 the average discount for the trust was 0.9%, however, 2019 has seen the trust move further towards trading at a premium and as of the 26 August 2019, the trust is trading at a premium of 0.4%. The weighted average discount within the AIC Global sector currently sits at 1.2%.

Zehrid brings with him an extensive track record of generating alpha, and this has already been reflected in the trust’s performance since he joined the company in June 2018. The performance of the trust has been exceptional since his appointment and he has considerably outperformed the benchmark and peers in NAV total returns. This has been aided by his higher conviction approach, and the move towards more ‘growthy’ companies. These companies are considered to be the highest quality, and ones that he believes will continue to deliver high returns on capital and compound growth in their earnings throughout the cycle.

The strong performance has been reflected in the trust’s move from a discount to a premium and the board’s ability to now grow the trust through issuing shares. With this said, the zero-discount policy means that investors need not worry about the discount widening. Therefore, we see the trust as a great vehicle for investors who might not like discount volatility but want to enjoy the benefits of the closed-ended structure.