Consistent Winner Has Earned Trust
07/29/2009 11:41 am EST
Gartmore Global isn't a flashy fund; all it does is deliver superior returns, writes Andrew McHattie of Investment Trust Newsletter.
Gartmore Global Trust (LSE: GGL) has a long history, not least the last 26 years under manager Brian O’Neill—a plain-speaking Glaswegian with little patience for investment fads and fashions. Gartmore [invests] in global equities with a clearly stated performance objective and what it calls “a consistent disciplined approach” to risk and return.
This has enabled it to outperform its benchmark—a 50/50 mix of the FTSE All-Share and the MSCI World ex-UK indices—through all market cycles whilst minimizing discount volatility for investors and delivering increasing dividends. That doesn’t sound like a bad combination.
Over five years, the trust’s assets are up by 43.5%, placing it sixth out of 33 global growth trusts; over three years it is ranked fourth out of 34 trusts; and over one year, it comes in eighth out of 36 trusts.
[This] is one reason why the shares trade on a discount to net assets of only 2.4% against a sector average of 7.3%. [Shares closed at 268.50 pence in London Tuesday, for a 1% discount to net asset value—Editor.]
The current discount is narrower than the trust’s own 12-month average of 5.6%, but Gartmore Global does not generally exhibit too much discount volatility. In part, this is because the trust has a discount control mechanism and a buyback policy which kicks in at discount levels [above] 8%.
The trust yields 2.8%, [and it has raised the dividend] each year since 2003. The trust has revenue reserves amounting to four years of dividend payments.
The managers have done what they have said they will do without taking undue risks, and the board also seems to look after shareholders’ interests. We would much prefer to buy on a wider discount—of course—but if the discount does drift back out towards the 5%-6% mark over the summer, this trust would make a sound addition to a portfolio.
Altus Resource Capital Limited (LSE: ARCL) is a new £26- million Guernsey-domiciled closed-ended fund. The investment objective is to realize capital growth from a concentrated portfolio—probably 20 to 25 holdings—of resource equities. The manager, Altus Asset Management, will invest primarily in a portfolio of what it believes to be undervalued equities in junior resource companies. These companies will be engaged in the exploration, development, and/or mining of metals and minerals and will typically has market capitalizations of less than £100 million at the time of investment. The fund will have an initial investment focus on gold producers.
To learn more, you can visit the company’s Web site at http://www.altrescap.com. Perpetual Income & Growth Investment Trust (LSE: PLI) has a 13.94% stake in Altus Resource Capital, which must say something about its quality. Ply’s manager Mark Barnett is not known for speculative flights of fancy.