Monks Investment Trust
Rated Fund 2014, 2017-19. Backs companies with above-average earnings growth
Investors who like management group Baillie Gifford’s long-term, growth-oriented, high-conviction approach but want a lower-octane version than that offered by its flagship fund, Scottish Mortgage, should consider the merits of Monks Investment Trust.
It was highly commended in the Best Global Growth Trust category of Money Observer’s investment trust awards in 2018, just behind its larger stablemate.
Manager Charles Plowden and his two deputies, Spencer Adair and Malcolm MacColl, took over the £1.8 billion Monks in 2015, since when performance has shot forward. The trio abandoned the cautious approach that had been adopted and started increasing the trust’s borrowing to take advantage of opportunities. At the end of last year, they were using their full potential gearing of 7% of the trust’s net asset value.
The team’s core belief is that a company’s share price ultimately follows its earnings. They therefore look to invest in companies that offer the prospect of sustainable above-average earnings growth. Instead of poring over companies’ financial statements, they focus on understanding where a company’s competitive advantage lies and whether this edge is sustainable.
The managers take a long-term approach: they expect to hold stocks for around five years. Typically, they invest in more than 100 companies.
The trust’s ongoing charges, at 0.52%, are among the cheapest in the global equity funds sector (both open- and closed-ended), which has contributed further to our positive view.
In the middle of 2016, the shares were on a 15% discount to net asset value. This has narrowed considerably and they typically trade on a small single-digit premium, but those who time their entry carefully could still buy at net asset value.
Narrative and ratings content all as of 01 January 2019.See all Money Observer rated funds
|Amazon.com Inc||3.03 %|
|Alibaba Group Holding Ltd ADR||2.58 %|
|Prudential PLC||2.49 %|
|AIA Group Ltd||2.18 %|
|Moody's Corporation||2.14 %|
|Anthem Inc||2.10 %|
|Mastercard Inc A||2.09 %|
|Schiehallion Fund Ord||2.09 %|
|Alphabet Inc A||2.04 %|
|Naspers Ltd Class N||1.97 %|
|United States||48.30 %|
|Asia - Emerging||12.12 %|
|United Kingdom||6.29 %|
|Financial Services||29.03 %|
|Consumer Cyclical||13.30 %|
|Communication Services||11.11 %|
|Basic materials||5.43 %|
Spencer is a portfolio manager. Spencer graduated BSc in Medicine from the University of St Andrews in 1997, followed by two years of clinical training in Edinburgh. He joined Baillie Gifford in 2000 and spent time working in the Fixed Income, Japanese, European and UK teams, before becoming an Investment Manager for the Global Alpha portfolio. He became a Partner in 2013.
Malcolm graduated MA in Economics and History in 1998 and MLitt in Economics, Politics and Management in 1999 both from the University of St Andrews. He joined Baillie Gifford in 1999 and has spent time working in the UK Small Cap Team and North American Team. He has been a Global Alpha Investment Manager since the product’s inception and became a Partner in 2011. Malcolm is a member of the UK Society of Investment Professionals (UKSIP).
Charles graduated BA in Modern History from Oxford University in 1983 and joined Baillie Gifford the same year, becoming a Partner in 1988. He was an Investment Manager in the UK equity team for over 20 years notably developing Baillie Gifford’s specialist UK capabilities, and was latterly head of the team. Since its inception in 2005, Charles has headed up the Global Alpha strategy which is currently his sole portfolio management role. He became Joint Senior Partner with overall responsibility for the investment departments in 2006.
Data provided by Morningstar.
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