‘We won’t buy a business if it can’t double in value’

Charles Plowden of the Monks Investment Trust tells Jessica Beard how the fund has had a stellar 2020 by owning pandemic winners

This year has been a big test for fund managers. They have had to grapple with a rocky investment landscape while changing the way they work and quickly adapting and finding businesses that work in the new world.

Charles Plowden, who runs the £ 3bn Monks Investment Trust, has proved his worth, returning an impressive 38pc in his last year before retirement. Mr Plowden tells Telegraph Money that his restructuring of the portfolio five years ago has paid off handsomely this year. However, investors do not need to worry about his successors doing the same when he bows out in April 2021.

WHO IS THE FUND FOR? The fund is for anyone who invests for the long term and is happy to take a global perspective. It’s one of the joys of it – it is an everyman fund rather than a niche one. We are for investors targeting capital gains, not income. So we pay the minimum dividend that investment trusts are allowed to, which is 0.2pc. We think the best use of our capital is to reinvest it rather than pay it out.

The fund goes back to the 1920s and got its name from being set up in a building in Austin Friars in the City of London.

WHAT DO YOU LOOK FOR IN A STOCK? The first thing we look for is that a stock is better than the average growth company. This means over the next five years they should be expected to grow, and fast. We have minimum return aspirations and have to believe there is a better than one third chance we will double our money in the next five years. So we target 15pc annual investment returns.

YOU TARGET STOCKS THAT CAN DOUBLE. CAN AMAZON DO THAT? The market value of Amazon is already close to $1.5 trillion (£1.1 trillion). So if it is going to meet our target of doubling in the next five years it will have to be close to a $3 trillion company. We do think growth gets harder but one of the lessons from the pandemic is that the strong tend to get stronger. We have reduced our investment over the course of this year, though.

The past five years have been dominated by tech companies and our investments in Amazon, Alibaba and Tesla have done very well. We bought those in March 2015, on day one when we took over. We bought more than half the portfolio in one day. We did a house spring clean and sold everything we didn’t like and bought everything we did.

WILL THERE BE ANOTHER SPRING CLEAN WHEN YOU RETIRE? Categorically no. I am due to retire in April and my colleague Spencer Adair, the current deputy manager, is taking over. I’m not expecting any big changes to be made to the investments after I leave. Two thirds of the team will be exactly the same as it has been for years.

HOW HAS THE TRUST BEEN AFFECTED BY THE PANDEMIC? Our performance this year has been stunning. The fund has benefited from the pandemic in many ways. We have owned quite a few beneficiaries as about half of the portfolio is invested in what we term the “new economy”, meaning a lot of e- commerce and the sort of companies that have benefited, such as home delivery, food delivery, electronic payments and so on.

We have had more winners than losers this year.

The trend over the past five years for us has been to move away from energy companies, so while we had some exposure it was only a small part of the portfolio.

WHAT HAVE BEEN YOUR BEST INVESTMENTS? The best returns we have made since my team took over management of the trust have been from Tesla, which rose by 1,073pc between March 2015, when we bought it, and October this year. But it only just won as the Latin American e- commerce company MercadoLibre gained 1,046pc over the same period.

AND YOUR WORST? Our worst investment was where we lost 95pc in an energy company.

However, the insurer Prudential has been the biggest disappointment. It has consistently been among our largest holdings but has lost 24pc since March 2015. It has been a drag on performance but we continue to believe in it despite how disappointing it has been so far. We are optimistic as it focuses on its Asian

growth franchise.

WHAT WOULD YOU HAVE BEEN IF NOT A FUND MANAGER? I’m about to find out when I retire this coming spring. I would have been a writer of some sort, perhaps a researcher or an analyst.