Martin Currie Global Portfolio Trust (MNP) aims to offer investors a portfolio of some of the most exciting, high-growth companies across the globe.
Zehrid Osmani has managed the portfolio since 2018, searching for undervalued, high-quality companies that can offer investors consistent returns. He is unconstrained in his approach and favours a highly concentrated portfolio. Currently MNP is made up of just 30 holdings, with the top ten making up more than 40% of the total NAV. The team at MNP go into great detail throughout the investment process, which is built around a proprietary toolkit, narrowing the universe of around 3000 companies down to 500. The portfolio has the second highest exposure to growth companies of any in the sector (73.4%), most of which are large cap companies (75.7%).
Since taking over the portfolio, Zehrid has been able to generate returns in excess of the peer group and benchmark, as we discuss in the Performance section. Under his management the trust has achieved NAV total returns of 26.1%; which is considerably more than the previous benchmark FTSE World (13.2%) and almost quadruple the AIC peer group’s returns of 7.1%. Performance in 2020 has been strong, and the trust protected capital well through the February and March downturn, before rebounding in April and May.
Typically the trust trades at around par, with the board enforcing a zero-discount policy. Currently the discount is around 1.8%, in comparison to a sector average discount of 4.4%.
[N.B. As of February 2020 performance has been measured relative to the MSCI ACWI, which includes emerging markets, unlike the FTSE World Index.]
Analyst's View
The manager had an extensive track record of outperformance over his career before Martin Currie; running multiple unconstrained equity funds at BlackRock, which generated an alpha of >5% p.a. for the five years that he ran them.
Zehrid brings this unconstrained approach to MNP also, having built a highly concentrated portfolio of just 30 companies. The trust’s active share of over 90% differentiates it from its peers, as we discuss in the Portfolio section. The trust is unique in having high levels of exposure to growth companies, while also having most of the portfolio in large caps. This large cap growth exposure does not come from the usual ‘FAANG’ stocks.
It is worth highlighting the detailed approach that the team take during the stock selection process. Investments are split geographically, based on revenue exposures, sector, who the consumer is, and by theme. This ensures Zehrid has a strong idea of where risks might be, and whether the trust is overexposed to a particular outcome in the future. In addition, all companies in the portfolio undergo stress testing. During our recent call with Zehrid, he explained that the entire portfolio was stress tested based on a dark sky scenario of a repeat of the GFC over the past year. We think – although the team never thought this outcome would actually transpire – this detailed research into how companies react to different environments has been vital in the trust’s outperformance this year.
| bull | bear |
| Manager with a strong track record of generating high levels of alpha | Volatility often comes with concentrated portfolios |
| Highly active and concentrated portfolio offers outperformance potential | The trust is growing but still relatively small in comparison to others in the sector |
| Zero discount volatility, while having the structural advantages of an investment trust | As a growth trust, it offers limited income - though quarterly dividend |
