Miton Global Opportunities aims to deliver returns in excess of sterling three-month SONIA +2% by investing in other investment trusts that the managers believe are trading on discounts which are wider than they should be.
The trust, which sits in the AIC’s Flexible Investment sector, has little in common with its stablemates in this sector, and has few comparable peers as a trust of investment trusts because of its unique focus on cash-plus returns.
It is highly focused, with 87% of its assets held in the top ten holdings, and the investment process is very much a ‘qual’ affair - driven by manager Nick Greenwood’s expertise built on near 40 years’ experience in the sector. Since December 2017 Nick has been supported by Charlotte Cuthbertson, who is a dedicated analyst resource for the trust.
The pair use few quant screens or filters, barring a system that allows them to monitor investment trust NAVs in ‘real time’ – estimating the real NAV of a trust by looking at its underlying holdings and working out their value, rather than waiting for end-of-day NAV updates from the trust itself, or indicative NAVs that largely reflect the movements of the major index constituents in a trust’s given market.
The trust is focused wholly on capital growth and has outperformed the average trust in the AIC Flexible sector by a broad margin over five years, delivering 62.5% in NAV total return terms versus 36% for the sector. Since launch in 2004, it has delivered annualised NAV total returns of 7.5%. Performance comes in fits and starts, however, with very strong years (2015 and 2017 being examples) coming between leaner years, an example here being 2018.
This is characteristic of the nature of the strategy. The managers are picking up trusts on wide discounts because, for varied reasons, the market does not recognise the opportunity they represent. Regardless of the managers’ skill, there isn’t much they can do to make the market see what they do – so it’s something of a waiting game.
The trust was stuck on a significant discount of its own until recently, but after a major overhaul by the board – which introduced a number of new strategies to deal with it – the discount has reacted and the trust has been trading on an intermittent premium over the last twelve months.