저자: Ryan · 외국인
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Kepler Trust Intelligence 월간 리뷰. 투자신탁 뉴스 전반을 다룸: Seraphim Space 증자와 SpaceX IPO 기대로 투자신탁 프리미엄 회복, 유럽 기회 신탁(EOT)의 전략 검토(JPEGI 이전·Liontrust 이전·현금 청산 3가지 옵션), Finsbury Growth의 분배 확대와 레버리지 증가, Schroder UK Mid Cap의 Saba 행동주의 대응 및 할인율 관리. 실적 측면에서 IBT·Schroder Oriental Income이 강한 수익률(IBT 순수익 36%, SOI NAV 35.3%)을 기록했고, 바이오 섹터 전망은 긍정적. 거시적으로는 AI 집중 투자 대비 일본·신흥국 분산, 금 비중 확대, 60/40 한계 지적. 인텔 주가가 닷컴 고점을 회복했다는 통계 소개와 배당 재투자 효과 강조.
다듬은 글
Hello and welcome to the monthly roundup from Kepler Trust Intelligence, brought to you in association with Traders. Join me, David, and the return of Ryan as we discuss the most interesting news and hot topics for investors from the last month. And in this month's edition, David spins us through SCF's interims and tells us why Majedie's David Cornell thinks now is not the time to buy the haystack,
as well as spinning us through some of the most popular investments in May. Joe is going to take us through IBT's latest results, as well as a whistle-stop tour of global equities, bonds, and commodities from her recent Market Matters podcast with New Burgers' Rebecca McMillan. Meanwhile, Ryan will be taking on stat of the month this time, looking at maybe the worst case of bad stock market timing ever, but not before taking a gallop through the news, including major changes at European Opportunities Trust and a look into what Nick Train is up to.
Thank you, Joe. And whilst it is a pleasure to be back, I'm not sure everyone is quite so happy that I'm over my laryngitis and can once again express my opinions. Now, just before we do tip into the news, let's briefly catch up on the space news that we discussed last time out. Yeah, so as a recap for those of us who were bothered to turn up last month, naming no names in particular, um we did discuss the prospects of a bumper share issuance for Seraphim Space, as well as the prospects for the SpaceX IPO, particularly on the likes of Scottish Mortgage or SMT.
Now, in the case of Seraphim, the C share raised £137 million, which was below the maximum £350 million goal, but it still made it the biggest investment trust fund raise in 3 years. Meanwhile, the shares on the main trust have continued to climb to over 230p at the time of writing, which is around about a 200% rise in the past year alone.
Elsewhere, with SpaceX having filed its IPO paperwork, we have uh more of an idea on valuations. The outcome of this will have a material impact on the number of investment trusts with stakes such as Scottish Mortgage. They published their results last month, which included the impact of SpaceX on NAV, which was, and I quote, "by far the large largest single contributor." Now, this has not only helped drive NAV growth, but also reversed sentiment on what is arguably a bit of a bellwether for the investment trust sector, which now stands at a modest premium, a sign of improving health for the industry.
Thanks for a useful catch up on that one. So, taking a quick detour from our scheduled programming, let me guess, some of those names are probably on May's most bought trust list. Yeah, they sure are. Listeners and readers will not be surprised in the slightest that SMT top the charts once more. Um but actually, this is the first month that I can remember for a while that does have a a real kind of strong tech theme.
The two largest tech trusts run by Polar Capital and Allianz, uh PCT and ATT, both came in second and third, while Seraphim was in fourth. Uh this was also reflected in the most bought stocks and ETFs, which I'll just mention briefly. Nvidia was top of the pops, and fellow chipmaker Micron Technology, which is now part of the $1 trillion club and is a 10-bagger over the space of the past 12 months, was a new entry in the list.
Um on over on the ETF side, also, there were two VanEck ETFs um quite high up, and they are both focused on one, semiconductors, and two, space innovators. Anyway, back to more solid ground. Ryan, what news stood out for you this month? Well, as we mentioned up top, there have been some major changes at the European Opportunities Trust managed by the very well-known Alexander Darwall.
The trust has been under strategic review after a series of challenges ranging from tough performance to the target of activist activity. Now, the outcome of this strategic review um provides three options to shareholders. They can either roll into a peer trust, JP Morgan European Growth and Income aka JPEGI.
Uh you could take the option of rolling into a fund managed by Alexander at his new parent firm Liontrust or for a cash exit at NAV less costs. So, a real range of possible outcomes there. Who do we think this is going to suit? Yeah, real range and it kind of feels a bit of a win-win-win really. Um those that want to walk away with cash um can do so at pretty much NAV just less costs.
Those that have things like CGT liabilities or who want to continue in a trust with really good active management in the region can roll over into a strategy that focuses on stock selection alpha with JPEGI. Um and for those who are loyal to Alexander, who's I mean recent challenges aside, was considered a sort of real star manager for many years, can continue to do so.
This outcome also helps neaten up the corporate structure, too. There've been some multiple changes behind the scenes at the trust. Alexander left Jupiter to set up Devon Asset Management many years ago um before that became part of River Global as a subsidiary there and River itself was then bought out by Liontrust.
So, a few moving parts behind the scenes. A real set of positives all around then. Uh now onto the subject of industry stalwarts, there have been some changes with Nick Train's Finsbury Growth Trust over the past month. Ryan, can you take through take us through these as well? Absolutely. So, first of all, let's just run through what's changed.
Uh Finsbury Growth Trust or has doubled the number of dividends it's paying per year moving to a quarterly distribution schedule up from the semi-annual previously. The amount that they're paying out is also increasing. The trust is introducing an enhanced dividend model, something that has grown in popularity in recent years, and as such the annual dividend will increase by about 50%.
This is going to take the historic yields up to between sort of 3 and 1/2 to 4% depending on performance, although unlike other enhanced dividend strategies, it's not a fixed percentage amount. Elsewhere, the board is proposing the deployment of the entirety of the 100 million pound gearing facility.
This should almost treble the additional exposure of the trust in cash terms, and if this were all to be the case, it would make the trust the most geared trust in the AIC UK equity income peer group, according to my calculations. That's quite the switch up. What are the key takeaways from all of this?
Well, as with most of these things, it can be taken in two ways, really. Now, firstly, it demonstrates the benefits of the investment trust structure, and as quite fundamental changes such as these can be made. With two of these changes, the trust is arguably now taking advantage of the tools available to it in that trust structure, and these have come hot off the heels of a reduction in the management fee earlier in 2026, which supports the narrative of boards acting in shareholder interest.
Now, secondly, and perhaps more interestingly, there is sort of a tacit acknowledgement that more needs to be done to improve performance of and help differentiate the trust in the peer group. has gone through quite a tough period of performance recently, and is quite a low-yielding trust despite sitting in the equity income sector.
Now, with interest rates having gone up, making cash rates available at the bank over 4%, a trust yielding something really with a two wasn't particularly appealing on a headline level, although we would of course caveat that there is really good growth potential that comes hand in hand with equity investing over just cash.
Now, this tough performance period has coincided with a style headwinds for the trust with the last years of the supportive years of growth mandates about to drop out of the all important five-year numbers. Now, this could be interpreted as an admission that the era of ultra-low interest rates is over and that change is in the air, potentially indicating a shift in the value versus growth debates going forwards.
A very interesting shift indeed, so let's keep an eye on what impact those changes have on returns. Now, moving on to our final news topic, some changes at Schroder UK Mid Cap or SCP. So, Ryan, can you also run us through these? Yeah, happily. And for any of those with your monthly round up bingo cards at hand, this relates to the actions of Saba Capital.
The activist investor holds a 19 and a half percent stake in this trust and is now able to exit this position by a recently announced tender offer at NAV less costs. In addition, there is a new discount control mechanism being introduced which will use buybacks to well, with the aim of keeping the discount in the sort of mid single digits, something it's currently achieving at around four and a half percent.
Are there any conditions involved in this at all? There are a little bit complex, so I'll try to summarize best I can. Um, the maximum of the trust that can be tendered is 49.9% and if there are more redemptions than this requested, the tender will not go ahead and instead they'll come back with a new proposal.
Uh, this is also subject to a vote at the end of the month, so it'll be interesting to see how this all shakes out. Now, that is it as we move on to results, we are sticking with the Schroder UK theme and David will be discussing the interims of the Schroder Income Growth Trust. David, what did these contain?
Yes, there was a slight NAV total return underperformance of about one and a half percentage points in the six months to the end of February, although long-term returns do remain strong under current manager Sue Nocka. [snorts] The underperformance was largely put down to the unusually concentrated market that we're seeing in the UK with a small number of FTSE All-Share constituents delivering exceptionally strong returns.
Now, that's obviously becoming somewhat of a theme of markets in general. That said, strong performance did come from the likes of Rio Tinto, SSE, and Balfour Beatty. And Sue was trimming some winners during the period and recycling cash into areas that she sees as seeing uh as offering better long-term value.
These include adding new positions in Glencore, Reckitt, and Relx, and increasing the trust position in GSK. Now, I believe SCS just clocked up its 30th year of consecutive dividend increases. So, do you think we'll see number 31 this year? Yeah, the board has certainly made it clear that that's its aim.
And we think that the foundations to achieve this are certainly there, given the dividend is supported by a 7.1p per share in revenue reserves, as well as a larger pool of distributable capital reserves. The good news from the results was that portfolio investment income rose 17.5% over the 6-month period.
That reflected a special dividend from Lancashire Holdings alongside a solid 7% rise in underlying dividend income. The trust also saw double-digit dividend increases from the likes of Prudential, XPS Pension, and Hollywood Bowl. Now, while some may see the fact that 30 of SCS's 46 holdings were actively buying back their own shares as somewhat headwind to the dividend, but Sue pushed back on that and noted that it actually considerably strengthened SCS's dividend cover, which should, as we mentioned, make the dividend more sustainable over time.
Now, moving on, Joe, you've been looking at the half-year results for International Biotechnology Trust. What were the highlights? Yes, so these were the results to the end of February, and to be fair, they were pretty outstanding results. Uh IBT's net return of 36% was well above the 30% return from the benchmark, um and share price returns were even better at 39% um as a discount narrowed from 9% to under 7%.
And I think that really there's two key drivers of this outperformance. The first was M&A. Um IBT had five portfolio companies acquired during the period and another five more acquired by the end of April um at meaningful premiums. And alongside that, the portfolio benefited from some positive approval and trial news flow.
I think really a good illustration of the benefits of active management. Um the managers locked in some large gains on Unicure before a reversal of that regulatory decision. And what about the broader outlook for the trust and the sector? Yeah, biotech's been rather in the unloved box for a while um thanks to high interest rates, uh US policy uncertainty, um frankly everyone piling into AI and rather ignoring all the other growth opportunities.
I think, you know, conflict in the Middle East has made markets a bit more risk conscious, but those uh headwinds have eased and there's a growing sense that investors are starting to look beyond AI for growth. Um and if that's the case, you know, IBT is well placed for that. The managers have also tilted the portfolio towards small and mid caps.
And these you know, late stage type companies are exactly what big pharma is acquiring to plug its looming patent gap. I think it's fair to say biotech isn't necessarily um an obvious income seeker's paradise, but IBT does also offer a 4% of NAV dividend. Um the discount has drifted back to around 8% since the period end, um which we think looks an attractive entry point given the managers' strong track record.
Absolutely. And finally on results, Ryan, you covered the Schroder Oriental Income interims. What's been happening there? Yeah, quite right. I picked up these um another set of remarkable interims with very similar figures to I B T. So just to double check that we hadn't crossed over data. Um, but yeah, this again runs up to six months to the end of February.
So just before the impact of the Iran war. Um, now while this the timing was quite fortuitous, the performance was again outstanding. NAV total returns of 35.3% at six months, considerably ahead of the benchmark 30.7 and the 30.1 of the weighted sector average. Yes, and quite impressive numbers there.
So what have been the main drivers and can you put this into context for us? Yeah, well as you'd expect, predominantly technology. Um, as we've alluded to earlier, um, very strong performance from tech companies in countries such as Taiwan and Korea. The latter of these also rallied on the back of corporate governance reforms, which pushed the market up.
There are other highlights too, of course, such as good stock selection in Australia, um, as well as an underweight position to China, which helped relative performance as that market struggled to keep up. Now as for context, to the end of the period, the trust has delivered a NAV total return of 91.6%.
Um, compared to 50.6% for the benchmark over five years, demonstrating that this performance is far from a one-off. And were there any other further announcements, anything to help differentiate the trust at all? Yeah, absolutely. There was a slight tweak to the dividend payouts. Um, not a major one, but previously the dividends have been quite back-loaded towards the final dividend in the year.
It's four per year. Uh, usually that that final was the largest. Um, but the board has set a goal to try and make them more evenly distributed across the interims throughout the year. So the second interim dividend was increased slightly rather than being the same as the first, and they've indicated the third interim will be as well.
Should they maintain their track record of increasing the dividend every year, it does mean that S O I will make dividend hero status at the end of this financial year, and that would make it the first Asian-focused investment trust to do so. Now, all this comes at a time when many peers are switching to enhanced dividend strategies, just as we saw with Fiske growth at the top of the show, and it means that Richard Sennitt, the manager of SOI, his approach of creating an organic and growing dividend really helps differentiate the portfolio versus the peer group.
Now, that brings us to the end of the results section. So, Joe, we'll move over to you. You caught up with Rebecca McMillan, who's a portfolio manager at Neuberger. Now, let's start with the bigger picture first. What were her thoughts on on general positioning? [snorts] Yeah, I'd say broadly constructive, but also with a fair bit of nuance beneath uh headline allocations.
So, they upgraded US large caps in early April, um thanks in part to the valuation reset, but they did barbell that with overweights in Japan and emerging markets. So, Japan really for the corporate governance story, um also improving margins. And Korea, Taiwan, and China for the AI leadership angle.
India for the domestic growth story, um also commodity exporters such as Brazil due to higher energy prices. She does see that earnings momentum holding up, but they're also keeping a close eye on bond yields, too. Um and I'm guessing that you also thought something seeming splintering of the Magnificent Seven.
Of course. Yeah, I think there's been a noticeable collapse in pairwise correlations. Um investors are finally becoming more discerning about who's actually generating a return from all the billions that they're pouring into CapEx. Now, Rebecca pointed out that some of the Mag Seven are channeling close to 100% of free cash flow into AI spending, and that's a very different picture from the picture we saw last year.
So, she very much advocates being more selective within the Magnificent Seven, so thinking about sustainability of growth, thinking about obsolescence, but actually also the risk of AI adoption pushing up prices in the short term before those efficiency gains come through, which I think quantity-types call an inflationary J-curve.
But also lining for the bottlenecks in the AI arms race, so chips, compute memory, and power energy and infrastructure there. And what about broader portfolio concentration? Is the classic 60/40 still doing its job? Yes, good question. I think it's fair to say she had reservations on that front. You know, inflation volatility has broken that reliable negative correlation between stocks and bonds that investors have leaned on for nearly two decades.
So, she thinks the diversification toolkit, if you like, needs to expand meaningfully into the likes of real assets, so commodities, real estate, etc. And they're also overweight gold due to the structural support of central bank buying, which we've talked about in previous podcasts. Um and put the more recent pullback down to a kind of liquidity-driven reset rather than any real change in the underlying investment case.
Also to say we covered an awful of the ground in about 20-25 minutes, so definitely worth listening to that full podcast. Absolutely. Sounds like there's an awful lot of content in there. Now, David, turning to you, you sat down with another David, which had the potential to be quite confusing. Um but what did you learn from David Cornell's JD Investments liquid endowment strategy?
Yes, I wanted David to kind of run me through what exactly that liquid endowment strategy is. Um So, just to to kind of briefly touch on that, the endowment part of it is essentially kind of that means the investment strategy is run for the very long term, you know, along the lines of what the big US university endowments do, um hence the name endowment.
Um now, its aim is to provide returns of CPI plus 4% over 5-year rolling periods um through a portfolio with equities at its very core. And the liquid part of the name refers to the fact that Ruffer doesn't invest in illiquid asset classes, so it has no private equity, it has no real estate, it has no infrastructure or venture capital or anything else.
I think it's quite interesting really, cuz a lot of those US endowments do invest in private equity and venture capital. So, what does the trust invest in? Yeah, so 2/3 of Majedie's portfolio, which is obviously the you know, the the kind of majority of it is in a sleeve that it calls external managers.
And here, the trust tries to invest with high-quality managers, generally ones that ordinary retail investors aren't able to access themselves, um which differentiates the strategy. Now, they like to back managers focusing on quite niche asset classes that are inefficient and where they have a real edge and hedge can outperform markets.
Um so, some examples given were a mid-cap biotech fund, which is run by a New York-based manager called Paradigm Capital, um and a few others include exposure to an activist Japanese small-cap manager, as well as a European long-short manager. So, how does David kind of see the current environment? What's his outlook at the moment?
Yes, I think the best comment from the podcast uh was when David picked up on the famous quote uh from Vanguard founder Jack Bogle, "Don't look for the needle, buy the haystack." Now, that's kind of become shorthand for, you know, proponents of passive investing. And David actually thinks that now is very much the time to start looking for the needle and forgetting about the haystack.
Now, that's because he thinks that the tailwinds that drove the bull market in asset classes over the past couple of decades and hence drove that kind of passive move, um you know, things like low interest rates, lots of liquidity and leverage, um is over and we're now kind of potentially in an era of higher inflation, higher interest rates, and certainly more geopolitical uncertainty.
And underneath that, markets are very highly valued and have very little room for any disappointment that might come their way. Now, to close the show, Ryan, it's your turn for stat of the month. So, what did you want to highlight for us? Uh well, having missed out on my slot last month, I'm bringing back one thing that I noticed in April.
So, a little out of date, but that is that Intel's share price has finally surpassed the peak it made in the dot-com bubble in the early 2000s. Now, that's really quite interesting. So, does that mean that investors with the worst possible timing can finally claim that they weren't wrong, just rather early?
Yeah, certainly one take. Um and if anyone listening was guilty of arguably one of the worst cases of bad timing in stock market history, congrats to you on your incredible patience. Um and now seeing a black line in your portfolio rather than a red one. [snorts] Um but on a more analytical note, I think the bigger takeaways here are that one, the importance of diversification, and that the price paid for stocks is very important.
Um investing in just a few stocks can cause issues such as this, um potentially being underwater for a long period. Um and now that's this could be a very useful reminder in the current environment where we are seeing a lot of returns being made in a highly concentrated number of stocks. Whereas buying in a diversified portfolio helps mitigate some of these risks.
I mean, of course, one strategy you could take is buy uh investment trusts, uh which provides you with immediate diversification and a portfolio that is managed by a professional. Yes, and I think I know a website with quite a few ideas for those. Yeah, I think I know the same website you might be talking about.
Um now, the second factor to consider is the importance of dividends on total returns. So, whilst the headline stat might look very clever um about the return on the stock finally going past 2000 uh its 2000 peak, um the stock, I mean, at the end of this month is up about 33% because that my chart has just gone parabolic upwards.
It's the same as some of the other tech holdings. Um so, you would be up about 33% from the peak in August 2000 to the end of April. Um but had you actually stayed invested throughout that full period, you would have received dividends, of course, from Intel. Now, the US is not renowned for its dividend market, but you you did get some income from it.
Now, had you been reinvesting those dividends, um you would have actually generated a return of about 133%. So, more than doubling your money. And in fact, you would have hit that break-even point um around 10 years earlier than you would have done had you not been reinvesting those dividends in 2017, despite having somewhat unfortunate timing.
Yeah, and if the maths that you've written down for me is correct here, that's the difference between an annualized return of 1.1% or 3.4%. Uh the latter of which would have beaten the average saving uh cash savings account and inflation over 20 or 26 odd years through the power of dividend reinvestment.
A very interesting lesson, indeed. Yeah, absolutely. So, it just goes to show what happens when you do reinvest those dividends and invest in a diversified portfolio, too. And on that note, it's time to draw a line on this month's monthly round-up, brought to you in association with Schroders. Thanks for joining us, and for more investment trust news, insights, and updates, head over to Kepler Trust Intelligence, and we hope to see you again next month.
Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise, and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor, independent financial advice should be taken before making any investment or financial decision.
Please be aware that there can be a time lag when we release podcasts, meaning time-sensitive information may no longer be accurate at the time of publication. Kepler Partners LLP has a relationship with some of the companies covered in this podcast, which may impair its objectivity. Kepler Partners LLP is authorized and regulated by the Financial Conduct Authority.
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