Martin Currie Global Portfolio 27 March 2023
Disclaimer
This is a non-independent marketing communication commissioned by Franklin Templeton. 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 (LON:MNP) aims to offer shareholders a differentiated, benchmark-agnostic global equity investment solution. Manager Zehrid Osmani seeks to identify quality-growth companies set to benefit from the most exciting secular growth trends. This includes a high exposure to companies providing technology and healthcare solutions, and those set to benefit from the impacts that supply chain constraints, geopolitical tension, and environmental solutions are having on the availability of resources. MNP is also exposed to the growth of the global consumer via European luxury goods companies.
Zehrid’s success in fundamental equity research has allowed him to refine the investment process and develop a systematic investment strategy that he employs alongside the trust’s additional eight dedicated investment professionals. The aim is to uncover companies with demonstratable competitive advantages, superior accounting practices, and an efficient allocation of capital which leads to sustainable cash flow generation over the very long term. An emphasis on strong ESG characteristics is of equal importance and MNP remains in the top percentile of all global equity large-cap funds for sustainability according to Morningstar.
A sharp adjustment in economic conditions over 2022 has impacted Performance. Despite this, Zehrid maintains his high conviction in the strategy, believing the fundamental strength of the holdings means they should hold up well in an environment of high inflation and higher interest rates. The board has been actively buying back shares implementing MNP’s discount control policy, the trust is currently trading on a wider than average Discount of 1.6%.
We think Zehrid’s strategy is attractive for long-term investors and has proven its ability to add value in more favourable circumstances. The full integration of Zehrid’s highly systematic proprietary ESG model leaves no stone unturned and is a significant contributor to the investment process, which combined with the focus on secular growth trends throughout the portfolio may suit those with a long-term investment horizon.
Zehrid’s unwavering commitment to quality growth has meant performance was impacted over 2022 by the dramatic shift in economic conditions. However, should the strain on valuations caused by inflation and interest rates ease, we think MNP is well-positioned as the focus on the fundamental strength of investee companies returns: Zehrid’s high conviction and relatively high gearing means the portfolio has the potential to see a sharp bounce-back in performance.
Bull
- Manager remains committed to the long-term growth strategy which may offer a more benchmark-agnostic solution
- A change in economic conditions and maintained gearing may lead to a sharp bounce-back in performance
- Significant focus on ESG characteristics of underlying holdings
Bear
- Structurally different macro environment may continue to present challenges to growth strategy
- Commitment to gearing can amplify losses
- Zero discount policy has led to significant buybacks which are shrinking the market cap
Fund History
