Mid Wynd International 05 January 2022

Mid Wynd International Investment Trust (MWY) offers investors a portfolio of global equities, with its managers, Simon Edelsten and Alex Illingworth aiming to participate fully in market upside whilst falling less than the market in drawdowns. While MWY has long been a ‘quality growth’ strategy, it is also defined by the team’s heavy use of thematic trends. As we outline in the Portfolio section, the team have recently seen fit to rotate out of their ‘emerging market consumer’ theme into a ‘sustainable consumer’ theme. They believe the outlook for the emerging market consumer is weakening, while the broader global consumer is placing greater importance on the sustainability of the products they buy. Valuation has also played a key role in some of MWY’s recent purchases, having led the team to purchase more modestly valued companies like KPN.

MWY’s performance over both the long and near term has been strong, it beating both its benchmark and peers. As we highlight in the Performance section, MWY has done more than simply generate outperformance, as it has been married with strong risk/return figures, as well as statistics that demonstrate the MWY’s ability to limit its downside risk. We also note that MWY has been able to maintain its outperformance during the last year, a period which has been particularly difficult for the quality-growth style of investing.

MWY continues to demonstrate strong ESG credentials, ranking amongst the best within its peer group according to Morningstar. This is not the result of an explicit set of ESG investment criteria, but rather it is a reflection of the team’s ethical principles. MWY continues to trade on a 3.3% premium, slightly above its long-term average.

We believe that MWY offers a compelling choice for a ‘core’ equity exposure, one that may be able to satisfy a broad range of investor types. The team, based on recent performance, has clearly been able to add value for its investors with strong performance and risk-adjusted returns. Because this has been achieved without the pain of additional volatility, as is often the case with quality growth investing, MWY may also be an opportunity for more cautious investors to gain exposure to global equity markets. We believe MWY’s historic downside protection attributes will be of importance for such an investor type. At the same time, we view MWY as continuing to offer a compelling choice for ESG conscious investors, reinforced by the team’s recent thematic rotation into ‘Sustainable Consumer’ stocks.

Looking forward, we believe the current market environment may continue to be turbulent, thanks to persistent inflation and waves of coronavirus. Yet MWY’s risk-conscious and valuation-led approach, coupled with the team’s willingness to actively re-position their thematic exposure over time, may allow the trust to continue its relative outperformance, especially against strategies that have static stylistic exposures.

We are encouraged by MWY’s expanding team (see Management), while the departure of any manager is always a cause for concern, we believe that the new hires, coupled with Simon and Alex’s long tenure together, means there will be little impact on the team’s effectiveness.