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Fund Profile


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Keystone Positive Change. 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.

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Keystone (KIT) aims to generate long-term total returns through investment in primarily UK equities. Managed since April 2017 by James Goldstone, KIT typically invests on an all-cap basis. The manager seeks to identify companies where investor sentiment is unjustly negative and there exists a catalyst to a valuation re-rating.

KIT typically offers a greater yield than much of its peer group. Dividend generation is considered important by the manager because he views this as evidence of alignment of management and shareholder interests, as well as capital discipline. Presently KIT yields c. 4.7% on a historic dividend basis. The board moved in 2019 to introduce a quarterly dividend. The current environment may present challenges to maintaining this level of dividend, but revenue reserves remain in place to potentially help mitigate any shortfall in portfolio revenue.

Currently trading on a discount of c. 12.7% (as of 20/04/2020), KIT is trading at a wider discount to both its own historic average and the wider sector. The board has been supportive, with significant buybacks earlier in 2020 and capacity for further buybacks.

Presently the portfolio remains overweight UK domestic earners, but the manager has consciously adopted a 'barbell' approach to relative risk positioning with regards to potential environments, with different positions that should benefit in either inflationary or deflationary environments including a significant allocation to gold mining companies. He believes he has identified stocks which are attractive on their own merits, but particularly so in a divergent range of economic results. On balance, however, the portfolio remains tilted slightly towards an inflationary environment, with the manager believing extraordinary policy stimulus measures will ultimately have this result.

Analyst's View

To our misfortune, we live in interesting times. In this context, the barbell risk approach currently employed within KIT offers some reassurance in an environment where the ultimate macroeconomic outcomes from an unprecedented economic lockdown (and the unprecedented scale of stimulus from governments and central banks) remain uncertain. We believe the overweight positioning in gold miners could offer significant relative upside, with this sector extremely cheap on most valuation metrics. On the other hand, if increased awareness of supply-chain fragility results in onshoring, the UK could well see repatriated capital flows and the outperformance of domestic assets.

Should the current macro environment metastasise into a broader credit crisis, KIT’s SMID market-cap overweight will likely weigh on relative returns, as it did in the sell-off earlier in 2020. We note that recent portfolio activity should mitigate this somewhat, with additions to utilities likely to provide ballast. The board has proven supportive, and we think acted sensibly, in expanding the level of gearing permissible in the event of an NAV drawdown, while any further buybacks could offer the potential that the discount narrow further. In the near term, even if revenues are impaired, there could be some support from revenue reserves to ensure dividends do not suffer too great an impairment.

bull bear
A discounted portfolio of out-of-favour stocks Whilst the board is acting (via buybacks), discount has been persistently wide
Board has mooted buybacks to narrow the relatively wide discount Gearing can exacerbate the downside (as well as amplify the upside)
Macro risks to relative performance reasonably balanced Short-term political and economic noise could remain a headwind to UK domestic assets in particular
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Fund History

08 Mar 2024 Keystone Positive Change: the outlook for 2024 and beyond
In this webinar recording, Lee Qian, co-manager of the Keystone Positive Change Investment Trust, provides an update on investment performance and discusses the outlook for 2024 and beyond. Lee also explains the positive impact that companies within the portfolio are making...
26 Jan 2024 Keystone Positive Change Investment Trust: manager insights
Baillie Gifford’s Lee Qian provides an update on the Trust’s performance and holdings, how companies in the portfolio are contributing to a more sustainable future, and explains why an era of constrained financing could benefit strong growth companies...
24 Jan 2024 Fund Analysis
KPC offers high return potential from a portfolio aligned to key social goals…
06 Oct 2023 Are you ready for your closeup?
We explain how the professionals go about building a peer group…
07 Aug 2023 Connecting with Brazilian change-makers tackling social problems
Keystone Positive Change Investment Trust’s Ed Whitten meets Brazilian firms seeking social impact and growth, as well as some of their customers...
16 Jun 2023 Transformative investment: a new approach to a sustainable future
Baillie Gifford investment manager Kate Fox discusses the Deep Transitions research project and its implications for investing in a more sustainable future...
09 Jun 2023 Positive change in challenging times
Baillie Gifford’s Rosie Rankin, director of the Keystone Positive Change Investment Trust, gives an update on portfolio performance, company research and opportunities for the year ahead...
24 May 2023 Fund Analysis
KPC is a stand-out option for investors seeking to have an impact with their money…
03 Mar 2023 Keystone Investment Trust - Manager Insights
Baillie Gifford’s Kate Fox, co-manager of the Keystone Positive Change Investment Trust, explains the trust’s objectives, gives an update on the portfolio and discusses the outlook for company holdings...
21 Sep 2022 Fund Analysis
KPC is a stand out option for investors seeking to have a positive impact on the world in line with ESG concerns…
17 Aug 2022 The world for sale
While investment trusts are lagging their open-ended cousins in the global sector, their discounts may provide an attractive entry point...
10 Jun 2022 The digital classroom
Technology is making education more accessible and relevant. Thaiha Nguyen, an investment manager with Keystone Positive Change Investment Trust and the Baillie Gifford Positive Change Fund, explores the companies changing the way we learn...
11 Mar 2022 Keystone Positive Change Investment Trust - Manager Insights
Joint fund manager Kate Fox provides a progress update on investing in companies delivering innovative solutions with a focus on sustainability, including the electrification of transport and biotechnology-enabled healthcare...
14 Jan 2022 Keystone Positive Change Investment Trust: Investing for Positive Change
In this webinar recording, Rosie Rankin, director at Baillie Gifford and Positive Change specialist, discusses impact investing and shares her enthusiasm for exploring areas and companies where profit complements purpose...
20 Oct 2021 Board games
Investment trust boards talk a good game about championing shareholders interests - but do they really deliver?
19 Aug 2021 Pandemic immunity
We ask which global equity trusts have outperformed through the different stages of the pandemic…
21 Apr 2021 Think Positive
How can we best invest to make life better for all, including the world’s poorest? Kate Fox and Lee Qian, joint managers of Keystone Positive Change Investment Trust, explain their approach to Jemima Kiss.
31 Mar 2021 A change in name, a change of strategy, it’s all positive
In this webinar recording, Rosie Rankin, a specialist on the Baillie Gifford Positive Change Team, speaks to Kate Fox and Lee Qian, investment managers of the Keystone Positive Change Investment Trust. The managers give a presentation on the details of the trust and some of the companies in which it invests, followed by questions from the attendees. Capital at risk.
05 Mar 2021 Keystone Positive Change Investment Trust
The aim of the Keystone Positive Change Investment Trust is to deliver attractive investment returns on behalf of shareholders over the long term, and to help shareholders contribute towards a more sustainable world. Investment managers Kate and Lee explain how they hope to do this. Capital at risk.
03 Mar 2021 Positively Radical
Investment and impact go hand in hand for the Keystone Positive Change Investment Trust. New to Baillie Gifford, the trust broadens its investment mandate under the watchful eyes of investment managers, Kate Fox and Lee Qian.
17 Feb 2021 Jungle Fever
Soaring interest in ESG has exciting implications, but risks pushing some stocks to distinctly unsustainable valuations...
09 Feb 2021 Fund Analysis
KPC’s board is proposing significant changes to the investment mandate and strategy...
07 Dec 2020 Flash update: Keystone Investment Trust
With the board announcing that Baillie Gifford will be taking over KIT, we look the new approach focusing on positive change…
21 Oct 2020 A closer look at gold mining companies and ESG
In this article, we hear from James Goldstone - fund manager of Keystone Investment Trust and Invesco Perpetual Select Trust: UK Equity Share Portfolio on assessing mining companies within an ESG framework...
19 Aug 2020 A champion for shareholders
A quick look at the steps which the Board of Keystone Investment Trust plc (Keystone) has taken to make things better for shareholders…
30 Jul 2020 James Goldstone
James Goldstone manages a number of UK and pan-European equity mandates at Invesco’s Henley-on-Thames office, including Keystone Investment Trust and the UK Equity Share Portfolio of Invesco Perpetual UK Select Trust...
01 Jul 2020 Oh the humanity...
We consider two strategies to cope with markets which, boosted by massive government support, may be witnessing the start of a ‘melt-up’ which may be followed swiftly by a melt-down...
15 Jun 2020 Investment Trust outlook
As the scale of the Covid-19 pandemic unfolds, James Goldstone explains his investment approach, what it means for markets, the companies he owns in his investment trusts, and how they are positioned for what may lie ahead...
06 May 2020 Fund Analysis
Now paying a quarterly dividend, KIT is a long-established trust with a valuation-focussed, bottom-up approach and a keen focus on governance...
23 Mar 2020 An approach to governance: creating long-term value for our clients
James Goldstone outlines why they advocate for proper and effective corporate governance and sustainable business practices within the Invesco UK Equities team...
09 Jan 2020 Full house
The KTI team’s ‘top picks’ for 2019 have delivered strong results…
18 Dec 2019 The squeeze continues: how trust costs keep falling
As pressure on costs remains, we reveal which trusts have achieved the most significant reductions in 2019….
29 May 2019 Fund Analysis
Keystone has moved to paying a quarterly dividend, making it potentially more attractive to income investors...
27 Mar 2019 NEVeR MiND tHE B*LL*CKS
We cut through the histrionics and discover, with surprising results, what life has really been like for British investors since David Cameron put it to 'the people'....
31 Dec 2018 Ladies, gentlemen and non-binary persons, start your engines…
With Britain only months away from the bright, sunlit uplands of Brexit and America officially ‘great’ again, we present a selection of ideas for what looks set to be a fascinating year…
24 Oct 2018 Fund Analysis
Keystone's portfolio has been revivified under the new manager, James Goldstone, and transitioned to a more value-orientated approach...
26 Jul 2018 Is the UK keeping this investor awake at night?
Over a year on from taking over his UK equities trust mandates, Invesco's James Goldstone discusses his outlook for UK markets...
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