Our overseas ‘investment trust’ tips have made us an average gain of 35pc
Portfolios similar to investment trusts exist in some other countries and we have tipped a handful – to readers’ benefit
Tongue slightly in cheek, last week we tipped a Swedish investment company, Kinnevik, as if it were an investment trust (it was, Questor should stress, a serious recommendation; treating it as an investment trust was where we took a small liberty). But this is far from the first time we have tipped overseas listed entities in this column for their similarities with British trusts and today we’ll look at how they have fared. Nowhere did we stretch the definition of investment trust more than when we tipped Berkshire Hathaway, Warren Buffett’s investment vehicle, in May 2019. Although the company has stakes in many of America’s quoted giants it also runs its own businesses, such as Geico, the insurer. Charlie Morris, the investor whose views we sought two years ago, says: “It’s a great way to own the US with a ‘quality’ and ‘value’ bias with lower tech exposure.”
The shares have gained 43pc (in dollar terms) since our tip. Hold. We have made an even bigger gain, 64pc, on Infratil, an Australian investment firm tipped almost two years ago. In that column we praised its ability to get into types of asset before other investors caught on and pushed their prices up. Data centres and mobile phone masts were two examples.
Pietro Nicholls, who at that time held Infratil in his RM Alternative Income fund, says: “We sold it about two months ago. It had a great run – Infratil made hay while the sun shone. In December it received a bid, which it rejected, from an Australian pension fund at a massive premium to the price at the time.” He says there may be some value left in the stock but we will follow his example and sell.
We tipped Granite Reit, Canada’s largest real estate investment trust, in October 2019 on the strength of its inclusion in Middlefield Canadian Income, a London-listed investment trust. Dean Orrico, its manager, says he still owns Granite and “it has been one of our top Reit holdings for many years”. He adds: “I remain very optimistic on the growth in e-commerce and the positive benefits accruing to the industrial property sector. Appetite among institutional investors for industrial/logistics assets continues to grow.” The shares have gained 38pc since our tip. Hold.
Our advice in August 2019 to buy shares in Magellan Global Trust, an Australian listed fund, and Cymbria Corp, a Canadian investment company, came about in a rather unusual way: we had stumbled across a fund research company called Stamford Associates and were so impressed by the thoroughness of its scrutiny of funds and their managers that we asked it to identify any that had passed all its tests and were available to savers in Britain.
It was testament to the firm’s rigour that only two investment trust-like funds did meet with its approval and perhaps revealing that neither was British. This week we asked Michael
Hogg, Stamford’s deputy chief investment officer, if his firm still held the managers of Magellan Global Trust, now part of a portfolio called Magellan Global Fund, and Cymbria in high regard.
He said: “We do continue to recommend both portfolio managers to current clients. Magellan is a quality investor, with exposure to defensive businesses that it thinks are able to compound over the long term. The manager is acutely aware of risk and has an excellent record of capital preservation. Edgepoint [Cymbria’s manager] is also differentiated, but in a different way: it looks for underappreciated growth and quality and aims to build a proprietary view independent of market noise.” Magellan has made us 4.5pc and Cymbria 18pc. Hold.
Investment trust news
Aberdeen New Thai is to merge with Aberdeen Emerging Markets;
the combined trust will change its mandate to invest directly in Chinese companies of all sizes.
A couple of trusts tipped by this column have changed their name. Blackrock North American Income,
tipped here in July 2019, was renamed Blackrock Sustainable American Income following approval by shareholders on July 29. JP Morgan European Smaller Companies,
recommended two years ago, is now JP Morgan European Discovery.