Building a diverse global investment portfolio with Brunner Investment Trust

A global approach to portfolio construction means managers can have their pick of the best companies from anywhere in the world. There are no sector, regional or investment style constraints. They have the freedom to choose the best-in-class business models for their portfolio.

That’s the approach taken by the managers of the Brunner Investment Trust. They view the whole globe as a possibility, looking for the very best for their trust. This all-encompassing approach suits our increasingly interconnected world, where most major businesses compete globally. We believe that to harness the best opportunities for investors, a global remit is required.

If a company is listed in the UK, but does most of its business in Korea, does that make it a British company, or a Korean one? If a firm is listed in the US but has a German CEO and does most of its business in Europe, which side of the Atlantic does it really sit? We’ve become so interconnected that it’s now almost impossible to draw defined boundaries between regions and sectors.

For example, Nvidia is an American business, and it’s now the largest semiconductor chip company in the world. But their chips are made in Taiwan, by a company called Taiwan Semiconductor, who rely on machine tools made by a Dutch company called ASML.

Production lines are blurred and those with regional remits may struggle to define which companies fall under their narrower requirements. But with a global investment strategy, there are no boundaries. Managers can follow the money as it flows between countries.

That gives managers the freedom to select best-in-class global investment opportunities for their portfolio. They can compare every infrastructure or consumer products business in the world and find the one that best suits their metrics and philosophy. A narrower approach with a smaller market and fewer opportunities will inevitably lead to a narrower set of options; portfolio diversification will be more limited. A global remit ensures investors have the chance to be exposed to the ‘crème de la crème’.

Co-lead portfolio manager, Julian Bishop, clarifies, “If you've got a global equity mandate, the best businesses become much more apparent. You can say, ‘That is absolutely best in class. I've never seen that anywhere else.’ If you're dealing with a smaller market, everything's a little bit more random.”

A global approach doesn’t necessarily mean the portfolio is evenly diversified across the world. Brunner’s managers don’t believe in diversification for the sake of it, or “deworseification” as Julian described. He comments, “You have to have conviction, believe in certain quality attributes or growth¹ attributes. I don't think we would ever buy a company just because it’s listed in a particular region or sector, simply to increase our allocations there.”

That means Brunner’s managers add companies to the portfolio irrespective of where they’re listed. It’s about whether that company suits the trust’s philosophy and is identified as having a best-in-class business model, supported by structural growth (growth driven by an underlying fundamental trend, irrespective of prevailing economic condition). Nothing is added purely for the sake of diversification.

By holding Brunner, investors could gain exposure to some of the best businesses in the world. Julian explains, “What's great about being global is you can go around and find the best business models and find the best businesses that participate in those models.”

Brunner’s managers aim to capitalise on their broad remit by scanning the world for the right opportunities for their global investment trust. The resulting selection of carefully curated companies aims to deliver long-term wealth generation through capital growth and rising income. We think a global, interconnected world necessitates a global, interconnected investment remit.

¹ Quality and growth refer to specific company characteristics that are believed contribute to long-term success and performance.