MIGO Opportunities 13 February 2019
Disclosure – Non-Independent Marketing Communication
This is a non-independent marketing communication commissioned by MIGO Opportunities. 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.
To outperform SONIA 3 month plus 2% over the longer term, principally through exploiting the pricing of closed end funds.
Miton Global Opportunities
Miton Asset Management Limited
Nick Greenwood;Charlotte Cuthbertson;
Association of Investment Companies (AIC) Sector
12 Mo Yield
Dividend Distribution Frequency
Latest Market Capitalisation
Latest Net Gearing (Cum Fair)
Latest Ongoing Charge Ex Perf Fee %
Turnover Ratio %
(Discount)/ Premium % (Cum Fair)
Daily Closing Price
Miton Global Opportunities aims to deliver returns in excess of sterling three-month SONIA +2% by investing in other investment trusts that the managers believe are trading on discounts which are wider than they should be.
The trust, which sits in the AIC’s Flexible Investment sector, has little in common with its stablemates in this sector, and has few comparable peers as a trust of investment trusts because of its unique focus on cash-plus returns.
It is highly focused, with 87% of its assets held in the top ten holdings, and the investment process is very much a ‘qual’ affair - driven by manager Nick Greenwood’s expertise built on near 40 years’ experience in the sector. Since December 2017 Nick has been supported by Charlotte Cuthbertson, who is a dedicated analyst resource for the trust.
The pair use few quant screens or filters, barring a system that allows them to monitor investment trust NAVs in ‘real time’ – estimating the real NAV of a trust by looking at its underlying holdings and working out their value, rather than waiting for end-of-day NAV updates from the trust itself, or indicative NAVs that largely reflect the movements of the major index constituents in a trust’s given market.
The trust is focused wholly on capital growth and has outperformed the average trust in the AIC Flexible sector by a broad margin over five years, delivering 62.5% in NAV total return terms versus 36% for the sector. Since launch in 2004, it has delivered annualised NAV total returns of 7.5%. Performance comes in fits and starts, however, with very strong years (2015 and 2017 being examples) coming between leaner years, an example here being 2018.
This is characteristic of the nature of the strategy. The managers are picking up trusts on wide discounts because, for varied reasons, the market does not recognise the opportunity they represent. Regardless of the managers’ skill, there isn’t much they can do to make the market see what they do – so it’s something of a waiting game.
The trust was stuck on a significant discount of its own until recently, but after a major overhaul by the board – which introduced a number of new strategies to deal with it – the discount has reacted and the trust has been trading on an intermittent premium over the last twelve months.
Miton Global Opportunities is a focused fund of investment trusts that has delivered annualised NAV total returns of 7.5% since launch. It offers a highly differentiated portfolio of investment trusts with few comparable peers, searching for 'deep value' opportunities where prices and NAV are poorly matched. As such it offers an excellent one-stop-shop for those who know there are attractive niche opportunities at the edges of the investment trust universe, but without the time or resource to research them properly themselves.
Until relatively recently, fund manager Nick Greenwood, who has 40 years' experience in the sector, was on his own at the helm but the appointment of Catherine Cuthbertson as a dedicated analyst gives depth and continuity to the approach. The bold steps by the board to address the discount, as well as the good performance from the manager have improved matters. As a result, the trust’s own discount has narrowed sharply, and the board have have been issuing new shares (just over £5m worth during 2018). As a result, the trust has grown significantly in size over last three years (nearly doubled) and now has over 30% of shareholders from retail platforms, meaning better liquidity for this relatively small fund.
|The proof is in the pudding: the trust has delivered excellent annualised returns since launch in 2004||The trust delivers returns in fits and starts, so it can be a long wait between 'lively periods'|
|Dedicated analyst adds strength and depth to the management team||Generally 'toppy' markets mean there's a good chance discounts across the board will widen in the short term - which is good news for those looking to profit long-term, but perhaps less attractive to those looking for immediate results from the trust|
|Share price volatility among investment trusts is increasing, which provides more opportunities|