Trustnet Magazine Issue 34 November 2017 | Page 22

/ FUND, PENSION, TRUST /
Trust
EDINBURGH INVESTMENT TRUST
Mark Barnett’s trust is trading at a wider discount than its sector average, even though it
is a top-quartile performer since he took charge
20
prospects regardless of the shifting
economic weather.”
Edinburgh Investment Trust has
struggled over the past year, making
just 11.91 per cent compared with
18.4 per cent from its IT UK Equity
Income sector and 15.92 per cent
from its FTSE All Share benchmark.
It has done even worse over the
past six months, losing 2.66 per cent
– this means it has made just 3.65
per cent year-to-date, one of the
lowest returns in the sector.
However, the trust has made
42.22 per cent since Barnett took
over from Neil Woodford back in
2014 – a top quartile return.
For investors worried that this
track record is not long enough
from which to draw any conclusions,
they should take note that the
Perpetual Income and Growth
Investment Trust, which Barnett
has managed since 1999, is a top
quartile performer in the sector
over the past decade.
Edinburgh Investment Trust is
currently on a discount of 7.5 per
cent, according to the latest data
from the Association of Investment
Companies (AIC), compared with
5.15 and 2.6 per cent from its
one- and three-year averages. The
sector average currently stands at
4 per cent.
The trust is currently yielding
3.6 per cent, which was 1.1 times
covered by earnings last year. 
FILE
MANAGER: Mark Barnett
LAUNCHED: 08/02/1952
DISCOUNT/PREMIUM: -7.5%
TER: 0.6%
FE CROWN RATING:
PERFORMANCE OF TRUST VS SECTOR
AND INDEX OVER MANAGER TENURE
60% Edinburgh Investment Tst (40.44%)
50% FTSE All Share (33.99%)
IT UK Equity Income (28.49%)
40%
30%
20%
10%
0%
-10%
T
RYING TO TIME THE
MARKET IS WIDELY
ACCEPTED as something
of a fool’s errand, but when a trust
with a respected manager and
excellent long-term track record
is trading on one of the widest
discounts in its sector, it is a
different matter.
This is the case with FE
Alpha Manager Mark Barnett’s
Edinburgh Investment Trust,
which has slipped on to a wide
discount following a period of
underperformance.
The four crown-rated trust
invests primarily in UK securities
(with up to 20 per cent overseas)
and aims to increase NAV in
excess of the FTSE All Share and
dividends in excess of inflation over
the long-term.
Barnett is cautiously positioned
even though corporate earnings
growth has been strong across a
number of sectors in 2017. This
is because he is concerned the
market has priced in the benefits of
a weak pound while overlooking the
numerous macro risks.
In a recent note, research
house Killik said: “The manager is
sceptical of the need to raise rates
aggressively in the short term,
principally due to the absence of
a strong backdrop of sustainably
higher levels of inflation.”
“The aim is therefore to invest,
with sensible diversification, in
companies with the prospect of
making money in absolute terms,
either driven by growing dividends
or from companies that can
improve or transform their financial
Source: FE Analytics
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