Martin Currie Global Portfolio 13 September 2023
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Martin Currie Global Portfolio (MNP) offers investors exposure to a range of the world’s most exciting secular growth trends, including the future of technology, resource scarcity and demographic changes. MNP has been managed by Zehrid Osmani since 2018, who has developed an unapologetically quality growth-focussed strategy with the aim of delivering long-term capital growth for shareholders.
As discussed in Portfolio, Zehrid employs an active, bottom-up approach, utilising a sophisticated research process which fully integrates a highly rated systematic proprietary ESG model. The team of nine portfolio managers and investment analysts focus on identifying companies that have demonstrable competitive advantages in their industry, exceptional accounting practices and a clear path to generating sustainable cash flows. This naturally leads to a greater allocation to large caps based in developed markets, although revenue sources are more diverse, with the significant overweight allocation to Europe bringing exposure to markets such as China, through luxury goods companies. This leads to a high-conviction, benchmark-agnostic, 30-stock portfolio, as demonstrated by the 96.5% active share relative to the MSCI ACWI Index, as at 31/07/2023.
The growth-centric approach can make it more challenging to generate Performance in value-driven markets. However, Zehrid’s long-term conviction, coupled with the structural use of Gearing, can lead to periods of significant outperformance in the right environment, as it did in 2020 and has done in 2023, year to date.
MNP is one of a handful of trusts to operate a zero-discount policy, with buybacks aiming to keep the share price close to NAV. The Discount is currently wider that the long-term average at 2%.
We believe MNP’s significant periods of strong Performance have highlighted the alpha-generating potential that Zehrid’s high-conviction, quality growth-focussed strategy can provide. We believe the strategy is likely to suit longer-term investors looking to gain exposure to a selection of core secular growth themes that seem likely to drive global equities for many years to come. That said, a strong stomach may be required for periods of volatility and underperformance during value-driven market environments.
The team has a meticulous approach to fundamental equity research and the systematic integration of ESG. In our view, the established, market-leading businesses within the Portfolio, combined with their exposure to key thematic growth drivers, should be better positioned in a lower-growth, tighter macroeconomic environment. As we move closer to the end of the interest rate-hiking cycle, we think this could start to provide support to quality-growth stocks. At the time of writing, the Discount of 2% seems attractive to us, too, as the zero-discount policy has tended to keep the shares trading closer to NAV. While substantial buybacks have not been enough to keep the shares trading at par this year, we think this is likely a temporary phenomenon thanks to the extremely high levels of risk aversion in markets.
- High-conviction, benchmark-agnostic exposure to long-term secular growth themes
- Easing of interest rate hikes could be supportive of quality-growth strategy
- Strong commitment to ESG embedded within the investment process with proprietary systems
- Can underperform in value or cyclically driven markets
- High-conviction strategy can enhance stock-specific risks
- Gearing can enhance volatility. Cost of debt likely to be higher at the rollover date in November 2023