In focus
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Manager Lucy MacDonald believes a focus on quality stocks is likely
to be the best option for investors as the end of the market cycle
approaches
Brunner
Investment Trust
FE TRUSTNET
what we’ve been doing to the trust has
brought it in,” said the manager.
The trust has made 251.02 per cent
since MacDonald joined in July 2005,
compared with 216.98 per cent from its
benchmark, split 70/30 between the
FTSE All World and All Share.
FACT BOX
MANAGER: Lucy MacDonald / LAUNCHED: 03/12/1927 / PREMIUM/DISCOUNT: -12.6%
/ OCF: 0.72%
FE CROWN RATING
PERFORMANCE OF TRUST VS SECTOR AND BENCHMARK
OVER MANAGER TENURE
Brunner Investment
Trust (251.02%)
IT Global
(248.36%)
Brunner IT benchmark
(216.98%)
300%
250%
200%
150%
100%
50%
0%
Au
08
-50%
MacDonald believes growth will
likely tail off as 2019 approaches, with
the market adjusting to changes in
both monetary and fiscal policy and
the expectation of lower profits – in
particular, she said the 10 per cent
growth seen in earnings this year is
unlikely to be repeated.
Instead, she has tilted her portfolio
towards quality stocks.
“In a period where you have limitless
liquidity then quality is not a feature
which is valued,” she explained.
“But as we move into this [new, post-
quantitative easing] environment we
think it will get reviewed and we think
it’s already starting to come true.”
The return of volatility to markets
in 2018 after a relatively benign – and
unusual – 2017 has thrown up some
other opportunities for MacDonald
to add some quality stocks to the
portfolio at more attractive valuations.
Other opportunities have arisen from
Brunner’s decision to adopt a new
T
he debate over whether growth
or value will be the best style
for optimising returns going
forward has continued to cloud many
investors’ decisions.
However, Brunner Investment Trust’s
Lucy MacDonald believes quality is
likely to be the best option for investors
as the end of the cycle draws near.
The manager said the changing
economic backdrop is likely to mean
a more challenging period in markets
from this point.
“Our view is that we are entering a
period where we think overall capital
returns will be flatter and a bit more
volatility will begin to creep into the
market after a period of exceptionally
high returns,” she said.
“We think that because we are
getting to peak liquidly following the
quantitative easing, from the fourth
quarter this year liquidity will begin
to be drained out as it turns into a
withdrawal.”
benchmark, allowing it to increase
exposure to companies based overseas.
Meanwhile, the renegotiation of
costly debentures has seen the trust’s
discount narrow.
“It went out to 20 per cent and then
a combination of performance and
Source: FE Analytics
trustnet.com