Martin Currie Global Portfolio 20 June 2024
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Disclosure – Non-Independent Marketing Communication
This is a non-independent marketing communication commissioned by Martin Currie Global Portfolio. 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.
Martin Currie Global Portfolio (MNP) provides investors with exposure to a selection of structural growth opportunities that are set to drive the global economy for years to come. Portfolio manager, Zehrid Osmani, takes an unapologetically high-conviction approach to investing in companies he believes are best placed to monetise their exposure to mega-trends driving the global economy. Currently, he thinks the most attractive sub-themes within these trends are: artificial intelligence, energy transition, and the ageing population. Zehrid is supported by a team of ten investment professionals who follow his meticulous investment process focussing on quality, growth, and valuations whilst incorporating a well-regarded, highly detailed, and systematic approach to ESG. Therefore, competition for capital is very high and turnover is low, resulting in a benchmark-agnostic strategy and a high active share of 91% versus the MSCI ACWI (see Portfolio section).
The focus on quality, growth prospects, and valuations mean the portfolio does not get caught up in more speculative areas of the market. That said, Zehrid’s high-conviction approach to disruptive growth areas of the market can lead to higher levels of volatility compared to more diversified strategies and can result in periods of underperformance when the style is out of favour. However, in the right environment the strategy can lead to significant outperformance and over the past five calendar years, the strategy has been able to consistently generate alpha versus a peer group of global strategies (see Performance section).
The trust operates with a zero-discount control policy and the board has been actively buying back shares which has helped minimise volatility and enhance liquidity for shareholders as they maintain a share price close to par (see Discount section).
Higher rates on borrowing and the expiring of a structural gearing facility at the end of last year means Gearing has been reduced to 3.9%—around its lowest level since the start of 2021.
In our view, Zehrid’s high-conviction approach offers a genuine benchmark-agnostic investment opportunity, with exposure to a group of long-term structural growth themes. Zehrid’s commitment to these themes has meant that performance characteristics can be more volatile and can be impacted when his style is out of favour or macroeconomic conditions have been less favourable. However, the strategy has also proven to generate significant outperformance of the peer group and indices when the tide turns. Given the portfolio’s sensitivity to interest rates, we believe it has the potential to continue its run of form that it has seen over the last six months if rates are cut. In the meantime, the focus on quality and valuations could provide some safety as inflation remains stickier than expected.
We would view any discount on the shares as attractive given the track record, and the current small discount to represent good value.
Bull
- Manager is committed to the long-term growth strategy irrespective of macroeconomic uncertainties
- Zero-discount policy (ZDP) helps minimise discount volatility and maintain shareholder value
- Proprietary ESG analysis is a cornerstone of the investment process
Bear
- Higher-for-longer rate expectations may present challenges to high-growth areas of the portfolio
- Thematic concentration limits diversification benefits
- Performance can experience periods of volatility
Fund History
