The principal aim of Monks is to deliver long-term capital growth, through a differentiated, actively managed global equity portfolio. The managers utilise a rigorous bottom up investment process, seeking out growth stocks which they envisage will offer above average earnings growth. In order to achieve this a long-term view is taken, ensuring that the fundamental attributes of the company are given ample time to drive returns.
Diversification is a key attribute of the portfolio, and constituents are split into four growth categories based on the type of growth that the managers anticipate the company delivering. Investments are also split into three broad holding sizes allowing the managers to back their judgement in the stocks for which they have greater conviction, and to embrace the potential for asymmetry of returns through positions in higher risk/return stocks.
Although the portfolio has an extremely high active share (92%), since the new managers took over the portfolio in 2015, the performance has been largely in line with the peer group and the FTSE World. With that said, trust has been able to pull away from the benchmark (+10.9% outperformance) and the peer group (3.6%) over the full three and a half years. Over 2018 (as with most trusts) the company has generated strong returns for the majority of the year, before losing most of the gains at the latter end of the year. More specifically, over the 11-month period, trust has delivered 0.1% returns, marginally behind both the FTSE World (+0.6%) and the Morningstar IT Global peer group (+1.3%).
Currently Monks is trading at premium (2.7%), relative to the sector weighted average discount of -2.6%.
There are plenty of points that draw us to Monks Investment Trust. Firstly, the diversified, multi-cap approach to growth investing is unique within the Ballie Gifford stable. Alongside this, the strong network of Baillie Gifford and established, committed team means that their bottom up, best ideas approach is one that has all the appropriate resources necessary for identifying successful companies. Holding 128 companies in a relatively unconcentrated manner means that some of the “punch” relative to stablemate Scottish Mortgage is perhaps lost, but in the context of current market volatility this isn’t necessarily a bad thing.
This is a unique global portfolio, managed by a highly experienced and sought after management team, which in our view justifies a small premium to NAV.
|Well diversified, growth orientated portfolio
||Trading on a premium
|Decent performance track record over the medium to long term
||Struggled to outperform the benchmark and peer group, in particular over the short term