Investment Trusts  

Martin Currie's Walker wants retailers to boost performance

Martin Currie's Walker wants retailers to boost performance

A brace of shares that have unjustifiably slid as the market turns against retailers are central to Tom Walker’s plan to turn around the performance of the £225m Martin Currie Global Portfolio Investment Trust.

Mr Walker spoke to FTAdviser shortly after the half-year results for the trust were released to the market.

For the six months to 31 July, the trust returned 5.3 per cent, compared with 12.2 per cent for the AIC Global sector average.  

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The trust announced a dividend of 1.8p, unchanged from last year.

The trust has never cut its dividend.

The fund manager said a key component of the returns achieved during the year was the investments in technology companies Facebook, Apple and Alibaba.

Mr Walker said while many investors are concerned that the “stratospheric” rise in the share prices of those companies he feels the business models of those companies is attractive enough to justify owning the shares.

The fund manager is relatively cautious on the outlook for the global economy, believing that rising debt levels and global deflationary trends will keep growth muted and interest rates low.

The retailers in which he sees value are L Brands (which trades as Victoria’s Secret) and TJX (which trades as TK Maxx in the UK).

Retail stocks are deeply out of favour with many market participants amid fears as to the health of the global economy, and the impact of technological change on the business models of “bricks and mortar” retailers.

But Mr Walker believes that such fears are not justified in relation to TK Maxx and Victoria’s Secret and that the former discounted clothing chain could actually benefit from the disruption.

He said TK Maxx’s business model is to rapidly change the range of items in its store, which prompts customers to want to visit the shops.

He added that stores which are struggling want to sell surplus stock, and TK Maxx can be a buyer of that stock at an attractive price.

He said the nature of the clothing Victoria’s Secret sells means customers want to visit the store to try on the clothing.

Mr Walker said the shares of L Brands “are valued as if the company is going out of business, and that is simply not justified by the performance of the business.”

The Martin Currie Global Portfolio Trust trades at a discount to net assets of 0.5 per cent.       

david.thorpe@ft.com