The trust targets capital growth through a portfolio of mainly listed investments, particularly in firms whose shares stand at a discount to estimated net asset value.
British Empire Trust (BTEM) targets capital growth through a portfolio of mainly listed investments, particularly in firms whose shares stand at a discount to estimated net asset value (NAV). Its annual report for the year to 30 September 2018 shows assets of £942 million.
Joe Bauernfreund (pictured) at Asset Value Investors has been chief investment officer since October 2015, having assisted the previous manager for eight years. He has retained the trust’s value-oriented investment style, reinforced its commitment to constructive engagement with its investee companies and concentrated the portfolio down to 39 core holdings, including 14% in 16 cash-rich Japan ‘special situations’. He expects the long-term returns on equities to exceed the cost of debt, so gearing was increased during the year.
British Empire invests in holding companies and trusts, which in turn invest in listed and unlisted companies, and in asset-backed firms.
Most holdings have high-quality underlying assets and strong balance sheets, their shares trade at a discount to NAV and their discount is likely to narrow. The weighted average discount on the trust’s holdings rose from 26% to 30% over the financial year.
The manager has historically favoured Europe and Asia ex Japan, but the portfolio’s underlying regional exposures ended the financial year at 27% Europe, 24% North America, 19% Japan, 18% Asia, 11% emerging markets and 1% UK.
British Empire’s NAV and share price total returns last year were 10% and 12% respectively. Both exceeded the 5.2% gain in the trust’s benchmark, the MSCI AC World ex US index. The dividend was up 1p at 13p in the year, the 13th successive year in which it has been raised or maintained. Ongoing charges were steady at 0.87%. Share buybacks enhanced the NAV.