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Martin Currie adds leverage to UK closed-end fund
In a sign of a high level of confidence in their ability to beat the market over time, Martin Currie has added a 10 per cent borrowing capacity to its UK-based closed-end ‘global portfolio trust’. The independent board, chaired by Neil Gaskell, said this was another endorsement of the high-conviction equities strategy.
The Martin Currie Global Portfolio Trust plc announced the move to the London Stock Exchange last month (November 23), after obtaining a £30 million (A$54.5 million) three-year loan facility, which represents about 10 per cent of the trust’s funds under management. The money was fully invested the following day.
In a statement the board said: “As structural gearing, the additional capital will be deployed on a pro-rata basis across the current portfolio of 30 high-quality companies. This maintains the shape of the portfolio and avoids market timing issues.
“This is another endorsement for Martin Currie’s high-conviction investment strategy and the approach of Zehrid Osmani, who was appointed portfolio manager in June 2018. Osmani has introduced a more structured research framework, a stricter focus on high-quality companies and employed greater scrutiny of ESG characteristics to ensure exposure to sustainable business models in the long term. This has resulted in a higher conviction, concentrated portfolio.”
Morningstar has awarded the trust the highest 5-star rating for performance and the maximum 5 globes ‘Sustainability Rating’. The trust features in the top of the AIC Global sector rankings and was the top performer of 2019. The rising popularity has resulted in the company regularly issuing shares from its treasury to meet the market demand for high-alpha, active portfolios that are genuinely distinctive, Martin Currie said.
The introduction of gearing, with potentially higher returns and commensurately a higher level of risk, has been considered by the board for some time. It has an added benefit of differentiating the trust from an unlisted open-ended fund based on the same strategy.
Note: Martin Currie is a sponsor of Investor Strategy News. Any views expressed are those of the author and not necessarily those of Martin Currie.
