Mid Wynd International 11 September 2019
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.
Mid Wynd (MWY) aims to identify companies which can generate long term growth whilst keeping a sharp eye on protecting investors’wealth during negative periods.
Managers Simon Edelsten, Alex Illingworth and Rosanna Burcheri, look for longer term growth areas around the world and companies that can invest and grow in value even when economies are dull. They group these ideas into broad industry themes and then ensure they have spread investments between different themes with different drivers and also stocks exposed to this growth which trade on attractive valuations, often less well-known companies.
The portfolio normally consists of eight to ten themes, although the manager will have themes on the back burner that aren’t being used. Each theme has an upper limit of 25% of NAV, each carefully compared to one another through a correlation matrix to ensure that the trust is not over exposed to a particular trend. As of August 2019, healthcare costs (17.2%), online services (17.1%) and emerging market consumer (15.6%) make up the largest themes.
With the benchmark as the MSCI AC World Index, the managers aim to outperform over the long term by profiting during rising markets, and then protecting capital where possible when markets fall. The aim of protecting capital is a key and consistent aspect of the trust and, according to the managers, since inception the trust has outperformed more in months when the market has fallen than when we have seen rising markets (61% vs 58%). According to data from Morningstar, the trust has delivered NAV total returns of 121.8% since the managers took to the helm of the portfolio in May of 2014, compared to a return of 90.5% and 91.5% respectively from the MSCI AC World index and the IT Global sector average. As such, the trust sits in the top quartile of the AIC Global peer group for generating alpha (4.03) over that period, this measurement - which shows the returns the managers have added beyond the underlying movements of the index - a testament to the success of their risk management processes.
Over the past few years the trust has consistently traded at a premium and this became even more pronounced towards the end of 2018, as investors looked increasingly for a ‘safe haven’. In December, the trust reached a premium as high as 7%, but this has since narrowed and currently the trust is trading on a premium of 3.8%.