All-Weather Trust Uses Flexibility to Create Opportunities

The Brunner Investment Trust has global exposure, with allocation to most major geographic regions and industries, including 24% to the UK. The flexibility to invest anywhere in the world allows for a huge range of opportunities, which increases diversification and spreads risk. The idea is if one sector is underperforming, it’s likely another is outperforming; risk can be levelled out. The key is to avoid being skewed too heavily to any one sector, theme or investment style and to always take a long-term view.

But, when every listed company in the world is a possible investment opportunity, how do Brunner’s managers choose the right ones for the trust? Portfolio managers, Christian Schneider and Julian Bishop use a ‘bottom-up’ strategy, believing it’s the quality of the business that matters, not its location. That means they choose holdings based on their fundamentals¹ and consider how they will be affected by the macro economic environment, rather than attempting to pick a portfolio that may react well to the prevailing or predicted conditions. For them, stock selection should be the predominant driver of risk and return.

After many hours of analysis, the portfolio managers arrive at a carefully constructed portfolio of global equities, containing some of the leading companies in the world. Julian and Christian believe these firms have sustainable business models that can deliver consistent profitability, as well as having excellent long-term growth potential.

With this diversified and flexible portfolio, Brunner aims to deliver capital growth and a regular and rising dividend, targeting stable long-term returns whatever the current economic conditions. “It's not a fund that will only outperform and work in one market, we think it has the flexibility to do well in most. We're not betting the farm, and therefore we hope to achieve good, consistent outperformance,” comments Julian. ‘Betting the farm’ is an American phrase which means ‘to risk everything on one bet’. It alludes to using the family farm to cover a gambling bet, conceived when someone really did bet the livelihood of their nearest and dearest in a poker game.

By investing with great sector and regional flexibility, Brunner’s portfolio managers are not risking everything on one bet. They’re creating a diverse portfolio, with risk carefully and widely spread. Brunner is designed to aim to deliver consistent investment performance, whatever the weather, and its stellar 51-year track record of continual dividend growth – which makes it one of the Association of Investment Company’s ‘Dividend Heroes’ – illustrates this all-weather success². The trust has one of the highest starting yields in the sector and, with over a year’s worth of dividend held in reserve, the prospect of continued income growth looks promising in the near term. A ranking, a rating or an award provides no indicator of future performance and is not constant over time.