BMO Managed Portfolio

With Income and Growth shares, the BMO Managed portfolio offers different solutions to investors with different objectives through investment in a diversified portfolio of investment companies...

Add to watchlist Download View key data

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by BMO Managed Portfolio. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

BMO Managed Portfolio

BMO Managed Portfolio Trust has two distinct share classes: Income shares (BMPI) and Growth shares (BMPG), each with discrete investment portfolios. As their names denote, these portfolios are managed separately with differing investment objectives.

Both strategies are managed by Peter Hewitt, who seeks to balance exposure to a variety of investment companies where he believes there are strong long-term management processes and identifiable and distinct strategies. A total-return mindset is adopted with regard to returns, and some downside protection in more adverse market conditions is desired whilst seeking to ensure the portfolios are exposed to long-term secular growth trends, as we detail under Portfolio. Peter will also seek to balance a variety of stylistic investment approaches and assets within both portfolios, though both are likely to be tilted in alignment with Peter’s view of market trends. This is based on a medium- to long-term view, and portfolio turnover is generally low.

This investment trust offers shareholders the ability once a year to convert shares in either share class to the other without incurring UK capital-gains tax, stamp duty, dealing charges or the ‘spread’. This dual-share-class structure is also utilised to enhance the income of BMPI, and the capital growth prospects of BMPG, through a mechanism which substitutes net income from BMPG for capital from BMPI, as we detail under Dividend.

Recent performance for both share classes has been very strong, driven in large part by exposure to technology, healthcare and other secular-growth-focussed strategies, as detailed under Performance. As we discuss under Discount, the share prices of both portfolios have typically traded within a narrow band around NAV.

Analyst's View

Performance has been exceptional in the past year. Whilst the Income portfolio has seen the NAV fall slightly, this is hardly surprising given the market backdrop over this time period, and Peter has commented that income generation looks robust. The income-transfer mechanism continues to support the level of distribution by the Income shares, and the progressive dividend objective of the board looks reasonably secure at a time when equity-market dividends look extremely precarious.

Having just experienced its best ever period of relative performance, it is reasonable to ask whether the Growth portfolio can replicate this in the immediate future. Statistically, this is unlikely. However, it is worth evaluating what has driven this performance, which has been the massive dispersion in equity-market returns by style.

The Bank of International Settlements has highlighted that there are presently much greater than usual ‘tail risks’ for both inflationary and deflationary outcomes. We believe the outperformance of secular growth themes, which strongly boosted BMPG’s returns, is a reflection of market expectation of these themes, but there are signs that beneficiaries of an inflationary outcome (commodities) are starting to outperform.

If this extends and broadens, BMPG could struggle in the short term, but the manager has noted that he is alert to such risks and will adjust the portfolio if there is evidence of sustained inflationary pressures. We think such an approach is in keeping with the long-term approach which has delivered good long-term returns.

Bull Bear
Strong long- and short-term returns on an absolute and relative basis
Rising inflation expectations would, in the short term, be a headwind to returns relative to the benchmark
Income shares offer a high yield of c. 5.1% covered by income on a trailing basis
May not suit investors who wish to control their own asset allocation
Share-conversion facility offers tax-efficient ability to adjust to different portfolio requirements
Gearing in BMPI can exacerbate downside as well as adding to upside
Callum Stokeld
Callum joined Kepler as an investment trust analyst in July 2019. Prior to this he worked as a senior investment analyst on a range of multi-manager, multi-asset portfolios, having previously worked at IFA firms in roles focused on oversight of fund selection and asset allocation. He graduated from the University of Glasgow with an honours degree in Law.

Fund History

Disclaimer

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.  

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm’s internal rules. A copy of the firm’s Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 9/10 Savile Row, London W1S 3PF with registered number OC334771.

Welcome to Kepler Trust Intelligence

Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority.
Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority. To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase. We do not share your personal information and your answers are not linked to your identity for marketing purposes.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.