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Fund Profile

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This is a non-independent marketing communication commissioned by Columbia Threadneedle Investments. 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

BMO Managed Portfolio trust is managed by the highly experienced Peter Hewitt, who has been applying his distinctive style of building portfolios of investment trusts for several decades. Investors can buy two separate share classes with distinct portfolios and objectives to suit their needs. The Growth share class (BMPG) aims to maximise total returns, principally via capital growth. The objective of the Income share class (BMPI) is to provide a level of income exceeding that of the FTSE All-Share Index, along with the potential for growth.

Once a year shareholders can – without cost or incurring UK capital gains tax – exchange between the Growth share and Income share classes. Additionally, as discussed in the Dividend section, there is a transfer mechanism whereby the net income generated by the Growth portfolio is swapped for capital from the Income portfolio, which enhances the dividend of BMPI – currently yielding an attractive 4.3%. Strong retail demand for these ready-made portfolio solutions has resulted in both share classes trading near par and the board raising capital (see the Discount section).

As noted in the Portfolio section, Peter seeks highly active trust managers with long term horizons running strategies that fit into his top down views on investment themes, style tilts and macroeconomic and market trends. In recent years Peter has tilted the portfolio towards growth orientated strategies, which has driven strong Performance over the medium and long term, with 2021 being a more difficult year. Peter diversifies across geographies, sectors, asset classes and investment styles when building portfolios, buying a wide range of trusts from sector specialists in biotechnology to alternative hedging strategies designed to protect capital during periods of market stress.

Analyst's View

BMO Managed Portfolio Trust provides investors with a convenient way to access the wide range of unique opportunities that the investment trust universe offers. The ability to efficiently transfer between Growth share and Income share classes makes the trust a flexible savings vehicle which could be used by an investor as a standalone investment solution, being well-suited to investors inclined to buy a ready-made, diversified portfolio managed by the experienced hand of Peter Hewitt rather than picking trusts themselves. Alternatively, BMPG or BMPI could be used as a diversifying holding for trust aficionados; the trust acting as a core holding in a portfolio sitting alongside higher conviction bets.

In terms of performance, BMPG has struggled in 2021 on a relative basis. We highlighted in our previous note in March 2021 BMPG was potentially sensitive to a rally in the value factor, a trend that played out through the rest of 2021. However, the medium and long term track record is strong, and the performance in 2021 was well within the range of expectations for an active manager and still positive on an absolute basis. Any resumption in the leadership of the growth style will likely be a strong tailwind to returns.

For income investors, BMPI provides an attractive yield that is particularly reliable, as it is well supported by the income transfer mechanism, the revenue reserves of BMPI and the reserves of the underlying portfolio trusts.

bull bear
Strong long term performance track record
Growth tilt could result in underperformance if growth style is out of favour
Income shares provide a secure and attractive yield
Gearing of underlying trusts and BMPI can exacerbate downside, as well as upside
Can convert between Growth shares and Income shares annually without being subject to CGT
Trust of trust structure does result in high overall cost of investment
Continue to Portfolio

Fund History

10 Jan 2024 Definitely maybe
Fund flows and discounts may shed some light on a once-in-a-generation opportunity…
18 Oct 2023 Computer says no
Markets are fixated on replacing humans with AI, rather than maintaining them with biotech. Could this be an opportunity to rotate profits?
07 Sep 2023 Fund Analysis
Attractive valuations across growth markets offer a good opportunity for CMPG/CMPI investors…
12 Jul 2023 Many hands make light work
We break down how multi-managers have performed over the past five years and their positioning for the inevitable uncertainty that lies ahead…
14 Dec 2022 Fund Analysis
The flexibility of a dual-share class strategy can provide a core solution for long-term investors…
06 Jul 2022 A game of two halves
In the second article of our series on the AIC Flexible Investment sector we see how performance has stacked up during two years when markets were poles apart...
30 Mar 2022 You say tomato…
Do it yourself or put it into a global fund and leave it to the experts - our analyst debate the merits of each approach...
16 Feb 2022 Fund Analysis
A ready-made portfolio of investment trusts with growth (BMPG) and income (BMPI) flavours…
21 Jul 2021 Every which way but loose
We break down the AIC Flexible sector into more useful segments…
24 Mar 2021 Shoot to Thrill: ISA targets for long term growth
We all intend to invest for the long-term but can often be distracted by the news...
10 Mar 2021 Spring Conference '21
Audio and presentations from 21 of the UK’s leading investment trust managers…
04 Mar 2021 Slides and Audio: BMO Managed Portfolio
Download the presentation and listen to the audio from our 'Ideas for your ISA' Spring Conference on 04 March...
04 Mar 2021 Fund Analysis
Offering both Growth (BMPG) and Income (BMPI) share classes, BMO Managed Portfolio Trust allows shareholders to switch annually between share classes in a tax efficient manner...
10 Feb 2021 Eye of the Pfizer
Mining shares have rallied in recent months. With further potential, what impact could this have on the relative returns of active UK Small cap strategies...
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
03 Sep 2020 Fund Analysis
With Income and Growth shares, the BMO Managed portfolio offers different solutions to investors with different objectives through investment in a diversified portfolio of investment companies...
09 Oct 2019 Fund Analysis
With Income and Growth share classes, the BMO Managed portfolio offers different solutions to investors with different objectives through investment in a diversified 'fund of funds' wrapper...
25 Sep 2019 One-stop shop: how multi-asset trusts offer superior diversification
Investment trusts are particular suited to this mode of investing. We examine their advantages over open-ended funds and highlight the trusts which do it well…
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