Downbeat Bankers at least manages positive return – Over the year ending 31 October 2018, Bankers Investment Trust generated a 0.8% total return on net assets but its share price fell from 852p to 835p to finish the year on a 3.6% discount. By contrast, the MSCI World Index returned 5.1% over this period. The chairman described the result as disappointing. One bright spot, however, was a 6% increase in the dividend to 19.72p.
Alex Crooke, the investment manager, said the year was one of the most challenging he has faced in his career. Talking about the underperformance he said it was: “…partly explained by the smaller exposure to the US relative to the benchmark, 31.6% as compared to 60.6%. I believe that purchasing expensively valued companies will ultimately hurt returns over time. The US is now a highly valued market that has outperformed other global markets for seven years during the last decade and therefore an element of caution is warranted in terms of increasing exposure. Our stock selection has offset the underweight, with the North American team producing a very impressive performance by focusing on long-term secular trends such as paperless payment, disruption and health care. The European and Pacific portfolios also delivered strong relative returns, with a focus on quality companies with dominant market positions in their industries. It was not a year to bet against market trends reversing, momentum remained strong for market leaders and value and income stocks underperformed.
The UK remained mired in Brexit uncertainty which has made the UK stock market almost un-investable in many international investors’ eyes. Sterling steadily declined against the US dollar, although it has held its own against the Euro. The UK economy has seen little impact from Brexit, benefitting from the lower exchange rate. However the strains have latterly become apparent with reduced inward investment flows and tighter labour markets as immigration falls. The portfolio’s exposure to the UK was reduced further this year, ending at 25.2%. The majority of the underperformance against the benchmark can be explained by the UK exposure and the underperformance of the UK stocks we held. A narrow number of the largest stocks performed well in the UK but the mid-cap stocks, which are more domestically exposed, did not perform for us.”
BNKR : Downbeat Bankers at least manages positive return
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