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Fund Profile

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This is a non-independent marketing communication commissioned by Baillie Gifford. 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
MNKS shares have derated, but the managers believe the portfolio will be resilient…
Overview

The managers of Monks Investment Trust (LON:MNKS) aim to deliver long-term capital growth through a well-diversified, actively-managed, global equity portfolio. Rigorous bottom-up analysis is at the heart of the investment process, with the managers, Spencer Adair and Malcolm MacColl, looking to identify growth companies with above-average earnings’ growth. The team takes a long-term view on their holdings, believing that patience, as well as their resolute focus on fundamentals, will give them an edge in delivering strong long-term returns.

Diversification is a key characteristic of the trust and the managers split holdings into three categories, depending on the anticipated growth. Holdings are also divided into three broad holding sizes, which allow the managers to embrace the potential for asymmetry of returns through positions in stocks with higher risk/return characteristics. In the team’s view, in the coming decade, growth will be much more evenly spread across different companies, which will suit their style of investing in a broadly-diversified Portfolio.

Since the new managers took over the portfolio in March 2015, MNKS has delivered good outperformance, which was magnified in 2020 and 2021. However, during 2022, the trust has underperformed, such that over the tenure of the managers, MNKS NAV performance has been in line with world equities (see Performance section). This has clearly been with higher volatility and beta.

As a result, in the significant shift of market sentiment towards growth companies, and trusts exposed to them, MNKS shares experienced a savage derating during 2022, from which the shares have not yet recovered (see Discount section). At the time of writing, the shares trade at a discount to NAV of 12%.

Analyst's View

Monks has plenty of characteristics that continue to make it an attractive vehicle for investors looking for exposure to growth companies around the world. In particular, the managers’ focus on diversification, together with their long-term view on investment, marks it out. This is a pure stock-picking trust. So, in our view, it is encouraging that, as we discuss in the Portfolio section, the team undertook their portfolio ‘weeding’ exercise so rapidly in March 2022. This was when it became clear that the global economic and political backdrop had changed so rapidly.

Certainly, 2022 has likely been a humbling experience. Since the managers took over the running of the trust in 2015, MNKS is now only in line with world equities and has experienced a higher volatility trajectory to get there. That said, it has performed better than its peer group. The managers seem optimistic that their companies, which are showing earnings’ growth increasing faster than that of the market, are less cyclically-exposed, have stronger balance sheets and should deliver over the long term.

Monks has seen its discount widen dramatically. The trust has low levels of gearing, a liquid underlying portfolio and a team who are highly experienced at taking the long view. The board continues to buy shares back, which may have stabilised the discount to some extent. At the time of writing, the shares trade at a discount to NAV of 12%, which may prove an attractive entry point for long-term investors, especially if inflation and interest rate worries subside.

Bull

  • Well-diversified, growth-orientated portfolio
  • Highly-differentiated investment team, with significant resources to weather a protracted storm
  • Low charges

Bear

  • Discount to NAV may widen yet further
  • Higher volatility than peer group and benchmark
  • Gearing, when employed, can exacerbate the downside
Continue to Portfolio

Fund History

12 Jan 2024 Monks Investment Trust: a three-dimensional approach to growth
The nature of growth is changing. Baillie Gifford’s Spencer Adair describes how shifts in the investment landscape are affecting the portfolio and explains how his team aims to benefit from holding three different company types...
27 Oct 2023 Microsoft reloaded: how Satya Nadella revitalised the tech titan
Satya Nadella has restored the Windows maker’s sparkle. Malcolm MacColl, deputy manager of The Monks Investment Trust, tells Leo Kelion how the far-sighted chief executive turned the tech titan around...
18 Oct 2023 Computer says no
Markets are fixated on replacing humans with AI, rather than maintaining them with biotech. Could this be an opportunity to rotate profits?
06 Oct 2023 Monks Investment Trust manager insights
Investment manager Malcolm MacColl discusses recent performance, portfolio positioning and how the team considers three earnings growth profiles in stock selection...
19 May 2023 Can Elevance Health transform the US healthcare system?
Malcolm MacColl, deputy manager of The Monks Investment Trust, shares the growth prospects around Elevance Health and how it can address the shortcomings of the US healthcare system...
27 Mar 2023 Fund Analysis
MNKS shares have derated, but the managers believe the portfolio will be resilient…
10 Mar 2023 The first course: week one of our ISA event in review
We look at the first four presentations of our ISA season event…
07 Mar 2023 Monks Investment Trust - Pragmatic global growth
Jon Henry
Rewatch this webinar from our month-long online series 'A feast of ideas for your ISA' hosted by the team at Kepler Trust Intelligence throughout March...
Watch Recording
11 Nov 2022 For Monks Investment Trust, diversity beats adversity
Having a varied portfolio, with holdings from software companies to renewable energy specialists, helps navigate volatility according to Spencer Adair, manager of Monks Investment Trust...
02 Sep 2022 Monks Investment Trust: Manager Insights
Investment specialist Jon Henry discusses changes to the portfolio, the impact of inflation on recent performance and how market volatility can lead to positive outcomes for active stock pickers...
17 Jun 2022 Baillie Gifford Monks Investment Trust: Growth investing in a changing world
In this recent webinar, manager of the Monks Investment Trust, Spencer Adair, outlines how the trust seeks to harness growth in an ever-changing world...
06 May 2022 Casting the net wider
Growth stocks are becoming more diverse, meaning stock-pickers need to embrace the unfamiliar, Spencer Adair, manager of The Monks Investment Trust, tells Ian McGugan...
12 Nov 2021 Virtuous cycles
From Ryanair to Rio Tinto, firms that suffer through tough times often resurface as big long-term winners. Spencer Adair, manager of The Monks Investment Trust, reveals what turns these stocks into comeback kings
08 Oct 2021 Baillie Gifford Monks Investment Trust - Manager Insights
Baillie Gifford investment manager Spencer Adair and client director John Carnegie review the portfolio’s performance and hone in on Tesla, Moderna and Sea, as well as its Chinese holdings...
19 Aug 2021 Pandemic immunity
We ask which global equity trusts have outperformed through the different stages of the pandemic…
05 Feb 2020 The best form of defence
We look at the continued rise of passive funds, and find out how investment trust managers are countering it...
23 Dec 2019 Insuring Asia
The extraordinary expansion of Asia’s middle class is turbocharging demand for products that provide a sense of security. Charles Plowden, manager of Monks Investment Trust, tells Colin Donald why the region’s life insurance giants are well-placed to reap the rewards...
23 Oct 2019 Sail away: the best trusts to escape the UK
We look under the hoods of Global sector trusts to see which offer the best diversification prospects for UK investors...
24 Jul 2019 Fund Analysis
Monks offers a highly active approach to investing in global equities...
13 Dec 2018 Fund Analysis
Diversification is a key attribute of the portfolio, with the managers focusing on the type of growth they anticipate each company delivering...
12 Oct 2017 Roaring back…
We analyse the drivers behind the significant outperformance of global active managers in 2017, following what was a very poor year for them in 2016...
09 Aug 2017 Fund Analysis
A growth oriented portfolio with a dull long term record, which has witnessed a significant reversal in fortunes thanks its new highly-regarded management team
28 Feb 2017 Don’t wanna be an American idiot…
After such a chaotic start to Donald Trump's presidency, we look at potential options for investors in the US equity space...
22 Feb 2017 Into the wilderness...
In this detailed study of the global equity sectors, we analyse how managers are positioned in a world of high valuations and seismic political changes...
03 Feb 2017 Analysis: What next for European ITs?
Our analysis shows that European investment trusts have in recent years delivered strong returns to investors from their current discount, but risks abound in 2017...
17 Nov 2016 Hunting for growth in a dysfunctional market...
Monks Investment Trust's Charles Plowden, Malcolm MacColl and Spencer Adair explain their approach...
05 Oct 2016 Analysis - Going global
As the prospect of a messy divorce from the EU becomes increasingly real, we look at ways to diversify your portfolio away from the UK...
08 Dec 2015 A close up on Monks...
Monks investment trust continues to trade on a wider discount than most of the trusts in its sector, despite the overhaul of its portfolio and encouraging interim results last week...
View all

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