The manager of the £928m Bankers Investment Trust has explained why the company was hit by a “couple of potholes” last year and how he reacted to the tough UK environment.
Speaking during the trust’s annual general meeting, portfolio manager Alex Crooke said the trust was “partly saved” by the fall in the value of the pound because he has been increasingly shifting his exposure overseas.
We hit a couple of potholes in February and June Alex CrookeHe said he has been steadily pulling away from the UK market, and now has halved the weighting to 30 per cent from the 60 per cent when he took over as manager back in 2003.
“We have worked hard to move those assets overseas and that has worked very well,” he said, admitting however that he should have reduced this exposure further.
The trust’s net asset value hit 23 per cent to 31 October, therefore putting it ahead of the FTSE All-Share return of 12 per cent over the same period.
However, the trust failed to outperform the FTSE World (ex-UK) index which had scooped up a return of 31 per cent, after the company’s performance was dragged down by its exposure to British firms.
“We hit a couple of potholes in February and June, but we only underperformed in those two months,” he said, pointing out that the trust lost out from not owning one of the UK’s biggest technology companies Arm Holdings, which is a huge holding in the FTSE All Share.
The Henderson-owned trust was also hurt by the Brexit vote in June, which Mr Crooke said was “very tough”, but said the team quickly embarked on “corrective action” by adding to the international holdings.
Yet the trust made a healthy return across the remaining geographies, with emerging market assets topping the company’s performance chart after scooping up a return of nearly 59 per cent in the year.
The trust’s allocation to Chinese ‘A shares’ meant it raced ahead of the average return in China holdings in the FTSE World index.
“Last year turned out a lot better than it felt,” he said, adding it was a difficult year for investment managers with markets wobbling in the first few months due to concerns about China and Deutse bank
“Generally investment markets got a lot better as the year went on, even though we had Brexit and the election of Donald Trump.”
During the meeting, Mr Crooke disclosed changes to the annual management fee arrangements, which he said put the trust “more in line with the markets”.
Fees were previously rolled over a two year average but are now calculated on assets for each quarter.
From 1 July, the management fee was amended to simplify the calculation and to take into account the increase in assets after the Henderson Global Trust transaction.
The annual management fee stands at 0.45 per cent of net assets up to £750m, and 0.40 per cent on assets over £750m.
Mr Crooke added: “The board work very hard to keep these costs down.”
The trust's dividend grew by 7.6 per cent to 17p last year, marking 50 years of consistent dividend increases. It expects the dividend to grow by 6 per cent this year.
