- Trust outperforms benchmark on total return basis

- Stock selection and valuation key to success

- Larger than normal discount to NAV

‘All-weather’ global equity vehicle Brunner Investment Trust (BUT) put in a respectable half-year performance, beating its benchmark in terms of NAV (net asset value) total return.

As of the end of May the NAV per share with debt at fair value was £11.49, a drop of 1.4%, while the benchmark - which is a blend of 70% FTSE World Ex-UK and 30% FTSE All-Share - lost 2.7%.

On an NAV total return basis, the trust dipped 0.5% while the benchmark lost 1.3%, meaning it outperformed by 0.8% over the first six months.


Earnings per share for the trust increased by 18.4% to 13.5p during the half, back above the same period in May 2019 before the pandemic, which shows the strength of underlying trading for most of the companies in the portfolio.

Dividends per share rose by 9.6% to 10.3p, while for the full year the payout is expected to be 21.5p, a 6.7% increase.

The trust still has revenue reserves of 24.7p per share, which is more than enough to cover a year’s worth of dividends even if every company in the portfolio stopped paying dividends.

‘In the context of global equity markets, our balanced approach to portfolio construction has served us relatively well’ said manager Matthew Tillett of Allianz Global Investors.

‘Many of the strongest contributors came from the health care sector, where we find many companies that have the quality and growth characteristics we seek, whilst also being attractively valued’, added Tillett.

There were large positive contributions from US pharmaceutical firm Abbvie (ABBV:NYSE) and medical insurer UnitedHealth (UNH:NYSE) - a long-standing holding for the trust - as well as energy companies Shell (SHEL) and TotalEnergies (TTE:EPA).

Meanwhile, the decision not to own mega-cap tech stocks like Amazon (AMZN:NASDAQ), Nvidia (NVDA:NASDAQ) or Tesla (TSLA:NASDAQ) also helped performance as the trust avoided the massive de-rating these stocks suffered during the half.

Two major detractors were Swiss private equity holding Partners Group (PGHN:SWX), on fears of a drop in demand and rising interest costs, and German sportswear firm Adidas (ADS:ETR) over fears of a drop in Chinese sales.

The team added new positions during the half in US software firm Adobe (ADBE:NASDAQ), medical technology maker Align Technology (ALGN:NASDAQ), London-listed copper miner Atalaya (AYTM) and travel retail group SSP (SSPG).


With Brunner shares currently trading at 964p, the discount to NAV with debt at fair value is more than 16% compared with an average of 9.2% during the half and 9.3% at the end of the same period last year.

Chair Carolan Dobson described the discount as ‘wider than we would feel is ideal’, but also flagged it had been more stable than the peer group average.

‘An element of the sustained discount is likely the market's current aversion to the growth end of the market’, added Dobson.

The trust hasn’t been buying back shares this year, preferring to market directly to institutions and to raise its profile with retail investors.

While its investment approach ‘could have been accused of looking almost pedestrian’ compared with firms who invested heavily in the more speculative end of the technology space, Brunner has stuck to its ‘all-weather approach appropriate for a multitude of different market conditions’ while maintaining a strong focus on valuation, says Dobson.


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Issue Date: 13 Jul 2022