Fund Profile

Momentum Multi-Asset Value Trust 30 September 2020

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Momentum Multi-Asset Value Trust. 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
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Overview

Seneca Global Income & Growth Trust (SIGT) aims to achieve total returns of at least CPI +6% p.a. net of costs over a typical investment cycle, through investment across a range of asset classes and geographies. The management company, Seneca Investment Managers, looks to achieve real (i.e. inflation-adjusted) growth in capital and income over the longer term through investment in direct securities and via third-party fund managers employing a unique value-influenced decision-making process across a wide range of assets. The trust’s managers are avowedly contrarian, and believe SIGT can diversify wider investment portfolios as well as standing alone.

SIGT is managed very much on a team basis, with responsibilities for the various asset classes which comprise the portfolio apportioned amongst the four managers. Using a mixture of qualitative and quantitative inputs, the managers construct a long-term strategic asset allocation (SAA) which will achieve the majority of the trust’s long-term objectives. As we discuss under Portfolio, a further tactical asset allocation (TAA) is then applied, based upon a variety of observations.

As we highlight under Dividend, SIGT currently yields c. 4.6% on a historic basis as at 31/08/2020. SIGT has been successful in growing its dividend in recent years, and revenue generation is diversified by asset class. As well as being able to pay dividends out of historically accumulated revenue reserves, the board has the ability to utilise SIGT’s special reserve and realised capital reserve to support the level of dividend distributions.

SIGT employs a discount control mechanism (DCM). As discussed under Discount, this has proven effective in reducing discount volatility and in growing the trust.

Seneca Global Income & Growth Trust plc | Important information

Before investing you should refer to the Key Information Document (KID) for details of the principle risks and information on the trust’s fees and expenses. Net Asset Value (NAV) performance may not be linked to share price performance, and shareholders could realise returns that are lower or higher in performance. The annual investment management charge and other charges are deducted from income and capital. The Investor Disclosure document, KID and latest Annual Report are available at senecaim.com

Analyst's View

Although value as an investment style has been a challenging strategy for several years, and valuation dispersions in major markets have only accelerated following the COVID-19 pandemic and global economic contraction, the trust’s value-influenced multi-asset approach has fared better than might be expected over recent years. Markets have now priced in broad and elevated insolvency risks, whilst those assets perceived as ‘secular growth’ winners seem valued on the assumption they can continue to take economic share for years to come.

Such a scenario seems unlikely to be economically or societally sustainable, given the impact previously witnessed on productivity and wealth dispersion. Higher inflation expectations should reasonably have been expected to be a tailwind to value strategies, but even as inflation expectations have moved higher, a value recovery has not occurred in recent months. Investors looking to apply a value hedge to their portfolio could see SIGT’s different approach and wider range of assets as a way of doing so.

The main point being highlighted by the managers of SIGT, that even moderate economic normalisation could cause substantial repricing of ‘value’ relative to growth, is hard to ignore given the levels of value dispersion. In the meantime, SIGT investors can benefit from a c. 4.6% yield. This should remain augmented by relatively uncorrelated income streams from ‘specialist assets’. Recent amendments to the trust’s policy indicate the board remains supportive of the dividend for the foreseeable future.

bull bear
Access to niche, boutique, highly active fund management strategies and a focussed portfolio of UK value stocks
Uncertainty remains over the macroeconomic environment and associated portfolio risks
Attractive, well-diversified yield, well supported by income and reserves Market environment has remained challenging for value
Should act as a diversifier to mainstream equities with potentially high NAV beta to a macro recovery Gearing (although low in SIGT's case) can exacerbate downside as well as amplify upside
Continue to Portfolio

Fund History

18 May 2022 Riding out the storm
We look at trusts with tightly governed discounts which may appeal to investors in volatile markets…
18 Mar 2022 A trust for all seasons
MAVT has performed well under duress, will it do the same with some tailwinds working in its favour?
16 Feb 2022 Could inflation give a boost to value?
Momentum Multi-Asset Value may see some upside from higher prices…
19 Jan 2022 Fund Analysis
A ready-made multi-asset portfolio with an attractive yield and a contrarian, value style…
29 Nov 2021 Refined value, resilient performance
The team behind Momentum Multi-Asset Value Trust have stuck to their guns as contrarian value investors in recent years, and the resurgence of value this year has seen this pay off…
13 Oct 2021 Consistency is key
Marking its 25th anniversary, Momentum Multi-Asset Value Trust (MAVT) continues to deliver inflation-beating returns by investing in a highly differentiated range of assets, giving investors access to continually evolving holdings that they are unlikely to find in other funds…
21 Jul 2021 Every which way but loose
We break down the AIC Flexible sector into more useful segments…
12 May 2021 The nuances of value investing
With value stocks continuing their rise, distinguishing between different ‘value’ fund offerings can be challenging. Here, we look at a unique multi-asset value strategy…
26 Apr 2021 Fund Analysis
After a strong 12 months, the managers of the recently renamed MAVT are optimistic on prospects for value...
09 Apr 2021 New look, broader resources, same proven approach
The newly renamed Momentum Multi-Asset Value Trust continues investing in quality value opportunities across different sectors in the UK, with deeper and stronger resources at its disposal…
24 Mar 2021 Shoot to Thrill: ISA targets for long term growth
We all intend to invest for the long-term but can often be distracted by the news...
25 Feb 2021 Flying under the radar
We take a look at SIGT, a trust which is might not spring to mind for UK exposure, but offers flexible and differentiated exposure to any UK recovery…
20 Jan 2021 A trust with hidden depths
We take a look at SIGT, a multi-asset trust offering a solid income from a truly diversified portfolio…
02 Dec 2020 Results analysis: Seneca Global Income & Growth
After a strong six months, we look at SIGT’s outperformance of its benchmark and whether it has the potential to continue to do so going into 2021…
25 Nov 2020 Britannia Redux?
UK equities have been despised for almost five years and could offer extreme rebound potential…
19 Nov 2020 Thinking outside the box
Kepler Trust Intelligence looks at the unique approach to value investing taken by Seneca Global Income & Growth Trust…
06 Oct 2020 It's not about following the herd
With a small number of stocks driving global markets, we discuss how SIGT can be used to aid and diversify returns...
30 Sep 2020 Fund Analysis
Seeking to achieve total returns of CPI +6% p.a., SIGT invests on a multi-asset basis with a value approach...
04 Apr 2017 Getting active...
David Thomas, chief executive at Seneca IM, highlights the benefits of active management and why the team at Seneca Global Income & Growth have a very distinctive value style...
02 Apr 2017 Fund Analysis
A highly-diversified global multi-asset portfolio that aims to generate long-term income and capital growth via a value-driven approach...
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