Mid Wynd International 15 April 2020
Disclosure – Non-Independent Marketing Communication
This is a non-independent marketing communication commissioned by Mid Wynd International. 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.
The objective of the Company is to achieve capital and income growth by investing on a worldwide basis. The Company is prepared to move freely between different markets, sectors, industries, market cap and asset classes as investment opportunities dictate
Mid Wynd International
Artemis Investment Management LLP
Rosanna Burcheri; Alex Illingworth; Simon Edelsten;
Association of Investment Companies (AIC) Sector
12 Mo Yield
Dividend Distribution Frequency
Latest Market Capitalisation
Latest Net Gearing (Cum Fair)
Latest Ongoing Charge Ex Perf Fee
(Discount)/ Premium (Cum Fair)
Daily Closing Price
The aim of Mid Wynd International Investment Trust (MWY) is to grow investors’ real wealth by investing in a portfolio of high-quality stocks across the globe. The team, led by Simon Edelsten, Alex Illingworth and Rosanna Burcheri, take a long-term view to investing, identifying long-term ‘themes’ across the globe and anticipating how each will develop over the next three to five years. Detailed analysis is then conducted into each theme, before the team invest in those which they believe to be the long-term winners and losers.
The portfolio normally consists of eight to ten themes, although there will be a number of themes outside the portfolio being analysed for potential inclusion. These are all regularly compared against each other through a correlation matrix, ensuring the trust is not overexposed to a particular trend. As of February 2020, online services (20.3%), automation (16.3%) and emerging market consumers (13.8%) make up the largest themes.
Although it is by no means an absolute return fund, the strategy is designed to outperform during rising markets and to minimise downside during negative phases. The managers have achieved this since taking over the portfolio in 2014, as we discuss in the Performance section. The past three years have been particularly impressive. MWY has outperformed in both falling and rising markets, most notably in the recent market crash following the spread of the coronavirus pandemic.
Due to the excellent performance, the trust has consistently traded at a premium over the past few years. We note that as the coronavirus pandemic has progressed, discounts have been volatile, but currently the trust is trading at a premium of 5.1%.
Mid Wynd does exactly what it says it will: delivering long-term capital growth from global equities, with a risk-conscious approach that helps to minimize downside capture. As we discuss in the Performance section, performance in down markets has been particularly strong – including in the recent coronavirus-inspired sell-off – which we attribute to the trust’s unique theme-based process. Through focussing on long-term trends as opposed to short-term events, the managers have been able to identify high-quality companies which can continue to generate revenue irrespective of the macroeconomic uncertainty. This has been proven in 2020 with a number of sectors, including healthcare, automation and scientific equipment performing extremely strongly. In fact, the managers believe that the coronavirus pandemic will only continue to strengthen a number of the long-term trends they invest in, as people move more quickly to 100% adoption. Furthermore, in the current environment we believe the yield of 1.3% looks increasingly attractive. While UK companies are cutting their dividends, the prospects for MWY’s payout seem much better (see the Dividend section).
Investors will often shy away from trusts trading at a premium to NAV. However, given the tendency for the trust to trade on a premium and the discount-control policy, we think a single-digit premium could be an attractive entry point.
|Unique approach to investing, focussing on long-term trends||NAV performance could struggle if value stocks and sectors rebound|
|Exceptional performance since the managers took over in 2014||The addition of gearing could lead to greater exposure to the downside (as well as upside)|
|Strict discount-control mechanism|