‘I’ve sold Amazon – and slashed my UK exposure’

As inflation rises, many investors want to ensure that the income they get from their funds grows too. A number of investment trusts have raised dividends in consecutive years for the past 20 years. Just three have managed to do so without fail for 51 years – of which one is Bankers Investment Trust.

Alex Crooke, who has run the fund for the last 15 years, tells us why he has halved his position in Amazon, ratcheted up his China exposure, and still has regrets about oil giant BP.

We can invest across the globe, and currently have about a quarter of the portfolio in America, another quarter in the UK, and the rest spread between Asia, Europe, Japan and emerging markets.

I have a strong view on China and have about 9pc in the country at the moment, both in local shares and ones listed in Hong Kong – which is a pretty punchy position for a global fund. We own businesses there linked to the domestic consumption story, so spirits brands and duty-free companies at airports. Over the past two years we expected that interest rates were going to rise, and we’ve seen that in America, while in Europe the European Central Bank is talking about stopping its quantitative easing.

As a result, we want fewer premium growth companies and more cyclical [more exposed to the economy] and financial firms. We used the recent volatility to put more money in the market, to top up existing positions.

In the US we are switching our money to different sectors and companies. We are taking profits in technology companies and highgrowth names and allocating to more cyclical areas. For example, we have halved our holding in Amazon and have bought more American Express Alex Crooke ke was recently promoted to co-head of equities for r EMEA and Asia Pacific acific at Janus Henderson derson Investors.

He is also o manager of f the Global Equity uity Income and Global Dividend & Income funds, as well as Bankers Investment Trust. and companies such as Estee Lauder, which is very strong in the duty-free sector.

Investment manager Alex Crooke tells Laura Suter how he has increased dividend payouts for 15 years

Our view on the UK has shifted in the past three months or so. A year or so ago we had 35pc to 40pc of our fund in the UK; we felt that it was a good place to be invested. But after the Brexit referendum we thought we could get better value elsewhere, particularly from a currency point of view. Now we have stopped selling, as I think the worst of Brexit is priced in.

I don’t yet have confidence to increase my exposure, but if some better news on Brexit happens you could see the market improve.

Our UK holdings include BP, which at a share price of £4.70 is worth it for the 6pc dividend alone.

We also have Lloyds, which we have been buying gently, and some insurers, such as Prudential and Phoenix Group. It’s more of the international names, we’re not buying into domestic stocks – but there will be a time when we do. yielding market. The trust has two and a half years of dividends in its reserves. It’s the only holding my wife and I have, apart from shares in Janus Henderson. Definitely Cranswick, which is a UK stock that produces pork meat products for supermarkets. I like self-funding businesses and Cranswick has never had a fundraising and never issued new stock, but has had 30 years or more of growing dividends. It is easily a “10-bagger” [where the share price is 10 times higher than its initial purchase value].

I try to ignore and forget them, but I learnt a lesson from BP. After the Deepwater Horizon disaster, the share price went to about £6, and I had faith that someone would sort it out quickly.

In reality it fell to £3.50. I bought at £4 and it is still at £4.70. I should have reacted on the day and sold the position – I’m still working through that one. We bought American Express in late 2015 to early 2016.

It has faced challenges and the share price halved in 2015, going from around $100 (£72) to $50.

This was partly due to regulations that cut the rates that could be charged to retailers for transactions, and partly because Amex lost a big account – Costco – in America.

But what we saw is that the business is amazingly resilient, and it has a great client base.

In the US, Amex cardholders spend around four times as much per card than Visa or MasterCard cardholders spend.

We had the firm view that the rise of contactless payments and increasing use of credit cards would benefit the business. We thought the market was getting fixated on one customer leaving and could not see how electronic payments were the future. While card and electronic payments are high in North America and other developed markets, they are much lower in emerging markets, and globally cash still accounts for more than half of all payments made – showing the opportunity. The share price has risen from $65 in November 2016 to $96, but we would still buy at today’s price. It has a very attractive return on equity – in the range of 20pc – and we think it is still a very defendable position. The current price-toearnings ratio is 13.5 times and still only 12 times for next year. We think this is too low given the growth outlook for the market. It continues to be in the fund’s top 10 holdings and I continue to like it.

www.telegraph.co.uk/funds ‘ IT HAS A GREAT CLIENT BASE’