A relative overweight position in the UK market combined with poor relative returns from the US and Europe detracted from the performance of the Monks Investment Trust in the 12 months to April 30 2015.
In its preliminary annual results statement James Ferguson, chairman of the £1bn trust noted: “Geographic allocation was a notable detractor to relative performance over the financial year, accounting for 3.6 percentage points of underperformance. Good stock selection in emerging markets and Japan was offset by poor relative returns in the UK, North America and Europe (ex UK).”
He added: “The relative overweight to the UK market was also unhelpful, as was our Oil and Gas exposure, with Enquest, Seadrill, North Atlantic Drilling and IGas Energy in particular performing poorly.”
In spite of this the trust delivered a net asset value total return in the year of 13 per cent and a share price total return of 18.8 per cent, compared with the FTSE World index gain of 18 per cent in the period.
The results statement also highlighted the change in manager announced in March which saw responsibility for the trust moved to a different portfolio team within Baillie Gifford.
Mr Ferguson revealed that during meetings with shareholders it had become apparent that while these shareholders held Baillie Gifford in high regard as investment trust managers, “patience was waning with the existing portfolio management team”.
From March 27 the trust has been managed by Charles Plowden, supported by Spencer Adair and Malcolm MacColl, members of Baillie Gifford’s ‘Global Alpha’ investment team.
Mr Ferguson added: “Approximately 56 per cent of the company’s portfolio by value was reorganised following the announced changes and as at the end of the Company’s year was, with some very minor exceptions, positioned as the new portfolio management team wished.”
In the managers’ report the trio stated: “We are excited about the stocks we have selected. We believe they offer the prospect of above average growth which should translate over time into attractive returns. This confidence comes from our understanding of their fundamentals and our patient investment approach.
“There will be periods when fundamentals are not reflected in shareholder returns, such as when our growth style is out of favour. However, we are confident that our process will create significant value for investors over the long term.”
