18th Feb 2016 14:25
LONDON (Alliance News) - Brunner Investment Trust PLC on Thursday said it is becoming "an increasingly popular choice" for private investors, as it steps up marketing and advertising efforts to attract people looking for ways to save for retirement.
"This is evidenced by the increasing numbers of shares purchased through online investment platforms and wealth managers, especially in the second half of our financial year," said Keith Percy, who will be replaced by fellow board director Carolan Dobson as chairman in March.
The trust's net asset value per share fell by 0.7% on a capital basis in the year ended November 30, closing at 610.3 pence at the end of that financial year, outperforming the benchmark - an even split between the FTSE All-Share Index and the FTSE World ex-UK Index - which decreased by 1.1% over the period.
On a total return basis the NAV increased by 1.7%, slightly underperforming the benchmark's 1.8%.
"Brunner's investment philosophy, which is predicated on seeking attractively valued, potentially high return businesses with secular growth opportunities largely independent of the macroeconomic environment, has the potential to continue to deliver above average results during a time of anticipated higher market volatility and low equity returns," Percy said.
"These companies tend to have decent growth visibility, high returns on investment and strong cash flow generation, which allow them not only to reinvest in their businesses but also, in many cases, return excess cash to shareholders through dividend growth. The recent increase in market volatility should provide opportunities to buy shares in some of these companies at more favourable prices," Percy added.
The trust's top five equity holdings on November 30 were Microsoft, HSBC, Vodafone, Royal Dutch Shell 'B' shares, and BP, which together made up about 13% of investment funds. Those holdings were little changed as of January 31, with the top five being Microsoft, HSBC, Nielson, Vodafone and Royal Dutch Shell 'B', together making up about 12% of investment funds. BP dropped to eighth position.
Shares in the trust, which is managed by Lucy Macdonald and Jeremy Thomas of Allianz Global Investors, were up 0.7% at 488.40p on Thursday afternoon.
Percy said the shares traded at an average discount to net asset value of 12.7%, with debt at fair value on a cum income basis, during its last financial year. The discount was wider than the sector average of 7.9%.
"The board believes that constraints on liquidity and the relatively high cost of debt are amongst the contributing factors to this," Percy said.
"Buying back large numbers of shares would further impact liquidity and the board has therefore been reluctant to commit to large share buybacks. Nevertheless, as the discount was wider than the sector average during the year, the company has bought back a small number of shares as a means of reducing discount volatility and to generate modest enhancements to NAV," he said.
"We will be seeking shareholder approval to renew the share buyback facility for the coming year in order to be able to continue to use this tool," Percy added.
By Samuel Agini; [email protected]; @samuelagini
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