Trustnet Magazine Issue 24 December 2016 | Page 18

MONKS INVESTMENT TRUST

/ TRUST PICKS /

KIERAN DRAKE,
ANALYST AT WINTERFLOOD SECURITIES
WHILE MANY PEOPLE WILL
BE GLAD TO SEE THE BACK OF
2016, Drake warns that 2017 holds
the potential for further surprises.
Ongoing Brexit negotiations,
the inauguration of Donald
Trump and more detailed policy
announcements, combined with a
number of elections in the eurozone,
give rise to the potential for further
uncertainty and volatility.
With this in mind, he has
selected RIT Capital Partners as his
recommendation for 2017.
“This investment trust has many
of the attributes of a family office,
reflecting the influence of its
founder and largest shareholder,
Lord Rothschild,” he explained.

“It has developed a strong longterm track record through a topdown investment approach and
exposure to some of the world’s
leading investment managers.
The aim is to capture greater
participation in rising markets than
falling ones, with the rationale
that this will lead to both long

term outperformance and capital
preservation.”
The portfolio is constructed
with what is described by its
team as a “six-cylinder” approach:
theme driven; high-conviction
single stocks; investing alongside
exceptional managers (the focus is
on managers with unique insights
and genuine outperformance);
active currency management;
downside protection; and private
investments.
Drake points out that while
the trust is currently trading on a
premium, meaning there is some
risk of premium/discount volatility,
it has traded above net asset value
for extended periods in the past.

MARKUZ JAFFE,
INVESTMENT COMPANIES ANALYST AT CANTOR
FITZGERALD
THE OPPORTUNITIES THAT
IMMEDIATELY SPRING TO
JAFFE’S MIND are related to two
themes expected to play a major
role next year.
“First, with the emergence of
reflationary trends, the potential for
long-term inflation-linked income
from uncorrelated assets shouldn’t
be overlooked,” he said, bringing
him to the NextEnergy Solar Fund
and Greencoat UK Wind.
Jaffe says these two
complementary strategies provide
an appealing level of inflationlinked income (a yield of about
6 per cent from the NextEnergy
Solar Fund and 5.5 per cent from
Greencoat UK Wind), supported by
government subsidies.
“The underlying net asset values
[NAVs] are tied to long-term income
projections, which themselves
are not reliant on wider financial
market ebbs and flows,” he added.
16

“Additionally, if used in
tandem, the strategies provide
strong diversification: being UK
based renewable energy assets,
NextEnergy Solar Fund stands to
benefit from above-average sun
exposure and Greencoat UK Wind
from above-average wind levels, a
combination that has little chance
of occurring simultaneously.”
“Both trade on premiums due to
strong investor demand, which also
enabled them to raise substantial
equity throughout 2016; this
in turn funds further asset

acquisitions in order to strengthen
future income generation.”
The second theme Jaffe points
to is biotech, a sector that jumped
9 per cent in dollar terms on the
day of Trump’s election victory.
However, the analyst points out it
is still almost 30 per cent below its
mid-2015 peak.
“This presents quite the
opportunity for investors seeking
long-term growth,” he added.
“International Biotechnology
Trust is supported by specialist
investors SV Life Sciences and
offers exposure to both publically
listed and private equity biotech
(approximately 10 per cent of the
portfolio).”
“International Biotechnology
Trust itself trades on a discount of
about 10 per cent and will soon
begin paying investors a semiannual dividend equivalent to 4 per
cent of previous year-end NAV.”
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LAUNCHED IN 1929, MONKS HAS AROUND £1.2BN
IN NET ASSETS UNDER MANAGEMENT, WHILE ITS
ONGOING CHARGE IS A MODEST 0.59%*.

A MEASURED STRATEGY
AIMING FOR LONG-TERM
GROWTH.
Monks Investment Trust, we believe, could be a core investment for anyone seeking long-term growth. It is managed
by Baillie Gifford’s Global Alpha team who are also responsible for looking after some £28bn on behalf of clients across
the globe. As a result, Monks takes a highly active approach to investment and its portfolio looks nothing like the index.
The managers like to pick from what they believe are the best ideas available at Baillie Gifford and take a measured
approach to portfolio construction. They invest in around 100 stocks, which allows for excellent diversification, and offers
the chance to unearth some of the more interesting companies listed on global stock markets.
Please remember that changing stock market conditions and currency exchange rates
will affect the value of your investment in the fund and any income from it. You may not
get back the amount invested. If in doubt, please seek financial advice.
For a core fund that aims to go the distance,
call 0800 917 2112 or visit www.monksinvestmenttrust.co.uk

Long-term investment partners

*Ongoing charges as at 30.04.16. All other data as at 30.09.16. Your call may be recorded for training or monitoring purposes. Monks Investment Trust
PLC is available through the Baillie Gifford Investment Trust Share Plan and the Investment Trust ISA, which are managed by Baillie Gifford Savings
Management Limited (BGSM). BGSM is an affiliate of Baillie Gifford & Co Limited, which is the manager and secretary of Monks Investment Trust PLC.