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Fund Profile

Disclaimer

This is a non-independent marketing communication commissioned by Allianz Global Investors. 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
BUT’s all-weather portfolio has consistently generated strong performance…
Overview

Brunner (BUT) has generated a consistency of performance which has been particularly hard to come by for active global equity managers over recent years. The focus on constructing a balanced, high-quality-focussed portfolio, the longstanding UK bias and a greater focus on protecting against inflation have contributed to BUT’s 7.7% and 31% outperformance of the MSCI ACWI Index and global sector average, respectively, over the past five years (see Performance). As discussed in Management, BUT’s co-lead portfolio managers, Christian Schneider and Julian Bishop, are closely supported by Marcus Morris-Eyton and Simon Gergel. This four-strong management team leverage their individual expertise to provide a balanced global equity portfolio capable of generating both capital and income growth across a variety of market conditions.

As discussed in Portfolio, the long-term investment strategy is strictly bottom-up-focussed, with individual stock decisions based on balancing quality, growth and value characteristics with the dual goal of generating both consistent capital and dividend growth. Naturally, this leads to a portfolio geared towards key secular growth trends that the managers believe will drive long-term growth. This includes the overarching theme of digitisation, where the managers have sought to gain exposure across the value chain and within sectors, such as healthcare, financial services and sustainable energy.

The allocation to high-quality, sustainably growing companies and c. 24% allocation to UK equities has provided investors with a consistent and growing Dividend over 51 years, giving it one of the longest track records of any of the AIC’s ‘dividend heroes’. BUT is currently trading at a Discount of 12.7%, which compares to its five-year average discount of 10.8% and the five-year average global sector discount of 3.8%.

Analyst's View

We believe the consistency of BUT’s Performance over both short and long-term time horizons proves its capabilities as an all-weather investment solution which is likely to suit a wide range of investors looking to tap into the long-term growth potential offered by investing in global equities. The managers’ active, benchmark-agnostic approach, focussing on the fundamental strength of portfolio holdings, should continue to reduce the portfolio’s exposure to broader macroeconomic and stylistic factors that have driven financial markets over the past several years.

There has been some turnover in the lead manager role in recent years, with the introduction of Julian Bishop in November 2022 to co-lead, alongside existing manager Christian Schneider. However, in our view, this has not affected the underlying investment strategy, providing further stability and balance across the four portfolio managers’ investment styles. In our view, this is welcome and should continue to prove particularly valuable during unsettled market environments. We think BUT’s focus on long-term secular growth themes, combined with the high-quality, market-leading nature of the listed companies within the portfolio, is likely to remain the driver of long-term returns. In our view, this should make the strategy less susceptible to higher interest rates and should continue to provide a valuable inflationary hedge, due to their staple-like characteristics compared to more speculative areas of the market.

BUT’s progressive Dividend is an attractive feature, given its long-term consistency and reflection of the strength of the portfolio’s holdings. Combined with the long-term consistency of performance and well-balanced nature of the investment strategy with exposure to a range of the world’s highest-quality companies, we think this may lead to a narrowing of the wide Discount over time, despite it being close to its five-year average.

Bull

  • All-weather approach has delivered consistently strong performance, even in recent difficult conditions
  • Well-experienced and diverse management team
  • Progressiveness of dividend provides relatively attractive yield compared to alternative global equity strategies

Bear

  • UK bias can reduce diversification benefits
  • Has traded at a wide discount to NAV for a prolonged period
  • Although well-managed, gearing may exaggerate losses on the downside
Continue to Portfolio

Fund History

03 Jan 2024 Probably better asking an octopus
Our investment trust experts uncurl a tentacle each and choose their ‘top picks’ for 2024…
06 Oct 2023 Are you ready for your closeup?
We explain how the professionals go about building a peer group…
22 Aug 2023 Fund Analysis
BUT’s all-weather portfolio has consistently generated strong performance…
11 May 2023 Tipping point
Battered growth strategies have staged a comeback recently, but what happens now?
25 Jan 2023 Fund Analysis
BUT’s wider-than-average discount may present a buying opportunity, given its long-term consistent performance…
10 Nov 2022 Light at the end of the tunnel
Our speakers struck an optimistic note this week as we considered the prospects for investors at the end of a difficult year…
10 Nov 2022 Slides and Audio: Brunner
Download the presentation and listen to the audio from our webinar from 8 November...
17 Aug 2022 The world for sale
While investment trusts are lagging their open-ended cousins in the global sector, their discounts may provide an attractive entry point...
13 Jul 2022 Ready player one
We wonder where, if anywhere, should investors look for returns after a tumultuous first half of the year…
20 May 2022 Is it time to ditch index funds?
Averaging out makes sense in a boom market but may be much riskier in the future…
11 May 2022 Fund Analysis
BUT trades at an attractive discount despite ranking as one of the top-performing global equity trusts over the past 12 months…
15 Mar 2022 Do you have to sacrifice income for growth?
Brunner proves that investors don’t have to make a binary choice between the two…
10 Feb 2022 A healthy contribution
An aging planet and more spending on healthcare may put wind in the sails of Brunner’s portfolio…
02 Feb 2022 In safe hands
A decade long bull market and the seemingly unstoppable rise of tech stocks have made it easy to forget that good investing usually involves slow and steady gains…
19 Jan 2022 Apples and pears
We examine the relationship between the demand for open- and closed-ended funds, and ask whether investor behaviour can be predicted...
01 Dec 2021 Managing money through a tumultuous cycle
A clear focus on stock selection has helped the team at Brunner navigate a tumultuous year for both value and growth investors…
10 Nov 2021 Fund Analysis
BUT has generated strong returns over 2021 but still trades at a potentially attractive discount…
28 Jul 2021 Income for the ages
By focusing on balancing both income and growth, Brunner’s dividend has weathered the market storms better than many…
16 Jun 2021 A better class of travel*
Sharing many features of a traditional family office, investment trusts offer ordinary investors a cost-effective solution to managing family wealth...
25 May 2021 Quality growth, growing income, discounted price
A key advantage of the investment trust structure is the opportunity to buy well-regarded funds at discounted prices. Here, we explore one of them in depth…
05 May 2021 Fund Analysis
BUT trades at a historically wide discount, despite recent competitive performance and 49 years of dividend increases…
11 Nov 2020 Fund Analysis
Trading at the widest discount in the AIC Global sector, BUT offers a balanced portfolio of global growth opportunities…
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