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• Brunner Investment Trust’s net asset value per share up 15.6% compared with the benchmark return of 6.3% in the financial year to end November 20071
• Net dividends up by 10.3%1
• Trust benefits from strong performance from UK mining and engineering companies, and emerging market stocks
• Growth shares predicted to outperform value shares in 2008
• Proposed change in benchmark to 50% FTSE All Share and 50% FTSE World Index ex UK
The Brunner Investment Trust's flexible and focused approach to stock selection has led to outperformance for the year ended November 2007. As well as an increase in NAV per share of 15.6% compared with its benchmark return of 6.3%1, net dividends were up by 10.3%1. Since the Trust refocused its portfolio in late 2004 and 2005 from over 150 holdings to the current 110, the Trust has returned 26.4% versus 16.8% on its benchmark index2.
Last year the Trust benefited from strong performance by its mining and engineering companies in the UK and its emerging markets holdings – including China Mobile and Petrochina – in its overseas portfolio. Other contributors to performance were Nintendo, the Japanese games console manufacturer, and Porsche, the luxury car maker. Brunner’s managers Mark Lovett (UK Portfolio) and Lucy MacDonald (Overseas Portfolio) have currently focused the Trust in larger ‘growth’ companies.
Commenting on the results, Keith Percy, Chairman of The Brunner Investment Trust, stated:
‘’The managers correctly anticipated the most important investment themes in 2007, which was a year characterised by a wide divergence of performance between different industrial sectors.’’
Commenting on the outlook, Simon White, Head of Investment Trusts at RCM said:
‘’In the current economic environment we anticipate that investors will continue to accord higher ratings to companies capable of generating reliable earnings growth. In 2007 we saw a modest reversal, for the first time this decade, of the trend of value shares outperforming growth shares, and we expect this shift in performance to continue this year. In a difficult market RCM’s ability to draw on the local expertise of its global research network, backed up by more qualitative Grassroots® market research, will prove a valuable tool in trying to avoid the inevitable profit shocks which will occur as growth slows.”
The Board has also decided to increase the international component of Brunner.
Commenting on this, Keith Percy stated:
“We are now recommending that shareholders approve the adoption of a composite benchmark at the forthcoming Annual General Meeting which comprises 50% FTSE All Share and 50% FTSE World Index ex UK, a change from the current 60:40 split.
"Brunner follows a ‘bottom-up’ investment strategy, meaning that the portfolio is assembled, in the first instance, on the basis of the attractiveness and quality of the underlying companies, and not by reference to their stock market listing. Backed by RCM’s Grassroots® research process, this investment approach has worked well and the shift to a greater proportion overseas builds on this success. Indeed as capital markets have become increasingly global, the location of company’s stockmarket listing often bears little relation to its principal operations or the geographical source of its sales.
"Dividend distributions on many overseas markets have also improved markedly in recent years so that the income penalty historically suffered through adopting an overseas investment policy is lower than in the past.
"We therefore believe that our proposed new benchmark better reflects these recent trends, builds on the strength of our fund mangers and should enhance the potential for shareholder returns in the medium term.”
The proposed change in benchmark will be put before shareholders at the company’s AGM on 20th March 2008.
- ENDS -
Notes to Editors:
1 – Source: RCM (UK) Ltd/ The Brunner Investment Trust, announcement of preliminary results for the year ending 30/11/07.
2 – Source: Datastream/ RCM (UK) Ltd, In GBP, 30/11/05 - 30/11/07 cumulative. Brunner Capital NAV = +26.4%, Brunner BM Price Index = +16.8%. The benchmark is currently 60% FTSE All Share and 40% FTSE World Index ex UK.
Brunner employs borrowing (gearing) with the intention of enhancing returns. Gearing can boost returns when investment perform well though losses can be magnified when investments do badly. You should be aware that this trust could be subject to sudden and large falls in value and in weak markets you could suffer substantial capital loss. Changes in rates of exchange may cause the value of investments and the income from them to fluctuate. Brunner charges 70% of its annual management fee to the capital account. This could lead to a higher level of income and a lower capital return, or future growth may be constrained.
The information contained herein including any expression of opinion is for information purposes only and is given on the understanding that it is not a recommendation and anyone who acts on it, or changes their opinion thereon, does so entirely at their own risk. The opinions expressed are based on information which we believe to be accurate and reliable, however, these opinions may change without notice. Past performance is not a reliable indicator of future performance. You should not make any assumptions on the future on the basis of performance information. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested.
Issued by RCM (UK) Ltd. Registered office: 155 Bishopsgate, London, EC2M 3AD. Telephone +44 (0) 20 7859 9000. Registered in England No. 2014586. Member of Allianz SE. RCM (UK) Ltd. is authorised and regulated by the Financial Services Authority (“FSA”). The FSA’s address is 25 The North Colonnade, Canary Wharf, London, E14 5HS. FSA Registration: 122219.
29/01/2008
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