The trust that’s quietly taking on the world

IT HAS not taken long for fund manager Zehrid Osmani to stamp his mark on investment trust Martin Currie Global Portfolio. Just six months in point of fact.

Since fully taking over the reins last October after four months shadowing the previous manager Tom Walker (now enjoying a hard-earned retirement), the former BlackRock portfolio and equity research specialist has quietly repositioned the trust’s £200 million of assets. The result is a fund exposed to the big themes that he believes will drive forward world economies and stock markets over the next five years and beyond.

Although it is early days, it seems the Osmani makeover is already reaping results with the trust’s performance against its peer group of global funds improving sharply. As a result, shorter term relative returns are more compelling than the longer term numbers. So, over the past year, the trust’s performance – a 19 per cent return – is only bettered by one of its 20 rivals (Lindsell Train). Over the past three years, where Osmani has had less of an influence, the trust is more lowly ranked – 12th out of 21 with a return of 56 per cent.

Osmani says: ‘I’m trying to focus on companies that can deliver at least five years of outstanding returns. I’m then backing my choices big time while ensuring the portfolio as a whole remains well diversified and not too risky.’

The result is a 34-strong stock portfolio – down from the high 40s when he took over – with exposure to companies collectively generating revenues from all four corners of the globe. As a general rule, Osmani is steering clear of companies in five ‘struggling’ stock market sectors – energy, basic resources, telecoms, utilities and banks. Instead, he is concentrating on three major investment themes: demographic change, resource scarcity and the impact of technological development on the world economy.

These themes, he says, provide the triggers for stock selections. For example, the growing middle-classes in emerging market countries such as China – a demographic change – are the main reason why the trust has stakes in luxury goods companies Kering (owner of brands such as Gucci and Yves Saint Laurent) and car manufacturer Ferrari.

Similarly, the technology theme is reflected in key holdings in outsourcer Automatic Data Processing and cyber-security specialist Check Point Software Technologies. Electric cars are a key component of the resource scarcity theme although Osmani is more interested in building positions in some of the component manufacturers rather than in a specific car manufacturer such as Tesla. ‘The electric cars market is projected to grow 40 per cent per annum for the next ten years,’ he says. ‘It’s an exciting area full of investment opportunities.’ Osmani, who runs the trust from Martin Currie’s offices in Edinburgh, says the companies he now holds in the portfolio should deliver profits growth over the next five years double that of the average for those businesses that make up the FTSE World Index.

Martin Currie Global Portfolio represents a sound building block for any investment portfolio although it should not represent more than five per cent by value. Although it pays a quarterly dividend, neither income nor dividend growth are priorities so it is not appropriate for income seekers. The trust’s ongoing annual charge is a reasonable 0.68 per cent.