Miton Global Opportunities, formerly Miton Worldwide Growth Investment Trust PLC, has announced its interim results for the six-months ended 31 October 2015. During the period, the company’s NAV total return was -4.4% and its share price total return was -2.8%. These compare against a return of -3.6% on the MSCI world and a 1.3% return on the company’s benchmark Sterling 3 month LIBOR +2%). The trust has seen a number of key developments recently. These include a change of name (designed to more accurately reflect the investment approach, a decision to join the AIC’s new flexible investment sector (for companies that can invest in a range of asset types) and changes to the company’s articles and capital structure (these will allow shareholders to realise of all or part of their shareholding at three yearly intervals from 2018).
In terms of the company’s performance, the manager highlights market weakness, particularly during the summer, and the costs of changing the company’s capital structure (approved at September’s AGM) have also impacted the trust’s NAV (by approximately 0.25%). However, in terms of individual holdings, the manager says that five accounted for the bulk of the positive contributions to performance. These were Rights and Issues Investment Trust, Real Estate Investors, Aurora Investment Trust, Reconstruction Capital and Terra Catalyst Fund. The manager says that, in his view, the trigger in most cases was a belated recognition of embedded value which had existed for some time. Conversely, Aurora Investment Trust announced proposals to move the management contract, which was welcomed by investors and was followed by a narrowing of the discount. The manager says that a number of other positions withstood the general the general market decline and posted gains. These included Better Capital PCC, Aseana Properties, Boussard & Gavaudan, Chelverton Growth Trust, F&C Private Equity, Phoenix Spree Deutschland, Taliesin Property Fund and Prospect Japan Fund.
In terms of detractors, the manager says that the company’s modest exposure to mining acted as a drag on performance. Elsewhere, Juridica Investments, suffered heavily following the loss of a case whilst Macau Property Opportunity suffered from a deterioration in sentiment following the Chinese anti-corruption drive. Japan also proved to be a drag on performance as investors questioned whether Abenomics was running out of steam. However, the manager takes the view that the change of corporate attitudes in Japan is slow moving but irreversible.
In terms of outlook, the manager says that the market in smaller closed ended funds has suffered from a decline in liquidity in recent months but that such an environment increases the potential for pricing inefficiencies and provides interesting opportunities to exploit. As such, whilst the manager maintains a cautious view about the general direction of equity markets, the trust is fully invested. Within the portfolio, the manager says that there are three areas where he believes disposal values are greater than stated ones. These are private equity, residential property in Berlin and second-hand traded life policies. In the case of private equity, the manager says that the industry has raised substantial sums which now need to find a home and so it is a seller’s market. Regarding Berlin property, the trust holds two specialist funds and both are in the process of splitting up the apartment blocks within their portfolio and selling individual flats as leasehold. The rental market in Germany is highly regulated, which depresses the value of tenanted property but, as a leasehold property, the manager these flats command around double the value they previously justified as a rented property.
Miton Global Opportunities underperforms in first half : MIGO