‘We may look like two cautious females but we are very active’
WOMEN W now account for more than one in five investment trust directorships. d Yet it is rare for the two most powerful po positions on a trust’s board – chairperson and investment manager – to be held by females.
For the past two years, this is exactly how things have been at Brunner, a global investment trust with a history going back more than 90 years. Chairing the fund is Carolan Dobson, a former investment manager herself, while in the investment hot seat is Lucy Macdonald, chief investment officer of global equities at asset manager Allianz Global Investors.
It is a relationship which seems to be working in the best interests of shareholders, judging by the overhaul that Brunner has undergone – an exercise which is still a work in progress. Quarterly dividend payments have been introduced to make the trust more investor appealing – an idea of Dobson’s when she first joined the board in late 2013. Furthermore, there is a strong commitment to grow the overall annual dividend by more than inflation.
Earlier this month, Dobson announced a first quarter dividend of 4.05p per share – with shares trading at 802p – and a determination to deliver an overall dividend for the year of 18.15p, a 10 per cent increase on the year before. Irrespective of whether the 10 per cent increase is achieved, Brunner is firmly on course to recording its 47th consecutive year of annual dividend growth – a record bettered by only half a dozen other investment trusts.
Dobson is also overseeing the paying off of expensive borrowings which have proved a drag on the trust’s overall investment performance. Later this week, debt of £15 million and £13 million – with interest rates of 9.3 per cent and 6 per cent respectively – will be repaid at a cost of £39 million. New borrowings of £25 million will be put in place at an interest rate of 2.84 per cent. Although there will be a small hit on the trust’s assets, it will ensure that in the future less of the trust’s reserves – capital and income – are used to meet debt interest repayments, leaving shareholders potentially with a greater slice of the pie.
On the investment management side, Macdonald is also making changes, slowly but surely reducing the trust’s holdings down to a preferred number of 60 – it currently stands at 70. She is doing this because she thinks a more concentrated portfolio will deliver better investment results.
The trust’s holdings have a strong international flavour, drawing on ideas generated by Allianz’s 80 analysts across the globe – based in Frankfurt, Hong Kong, London, San Francisco and Tokyo. The UK element – key for income generation – is overseen by Macdonald’s colleague Matthew Tillett.
Macdonald says: ‘Despite the fact that from the outside the trust looks as if it is being overseen by two cautious females, we have been extremely active in making it fit for purpose.’
The next issue on Dobson and Macdonald’s agenda is major shareholder Aviva. The insurance giant has made no secret of wishing to offload its 18 per cent stake. Macdonald is adamant that its withdrawal from Brunner can be handled without too much disruption. She says: ‘Aviva does not want to be there long term as a shareholder and we understand its position. What we are striving for as a trust is a broader spread of investor, keen to participate in our commitment to growth in both income and capital.’