Martin Currie Global portfolio holding up well – since turning out a decent set of results for the year ended 31 January 2020, Martin Currie Global Portfolio has extended its run of outperformance by falling much less than its benchmark index since COVID-19 hit.
For the year ended 31 January 2020, the trust generated a return on NAV of 24.6%, 7.5% more than the return on the World Index. Shareholders did even better than this as the discount narrowed. The share price return for the year was 30.4%. Since the end of the trust’s financial year, an up to 7 April 2020, the trust’s NAV has fallen by 7.3%, much less than the fall in its benchmark. The trust’s zero discount policy was suspended for a couple of weeks between 17 March and 31 March but has resumed since.
The dividend is being maintained at 4.2p. Revenue contributed 2.5p towards this and the rest was topped up from reserves. The revenue fell as the trust tilted towards higher growth stocks.
Extract from the manager’s report
“Performance has been strong across all regions, with particularly solid returns in Developed Europe and North America, up 13.6% and 21.4% respectively.
In terms of sectors, performance was supportive across most areas, except technology. Healthcare and industrials in particular were sources of outperformance. We are pleased with the portfolio’s performance since the shift to a higher conviction unconstrained approach to investing, focusing on finding attractively valued, quality, growth companies with sustainable business models. In terms of stocks that have worked particularly well, ResMed, the global leader in medical devices treating sleep apnea, was the strongest.
Having monitored ResMed for 18 months, we took a position in early 2019. At that point, its share price had dipped on the back of a disappointing update on business performance (albeit based on a tough comparison against the previous reported period). Later in the year, the company’s performance improved ahead of the market’s expectations, positively impacting the share price.
Also in the healthcare sector, CSL, the global leader in blood plasma-derived therapeutics, was another impressive performer. Supply/demand in plasma collection remained favourable as competitors struggled to deal with supply disruptions while patient demand accelerated. Visa was one of the strongest performers in the year, with the company benefiting from the trend away from cash and towards electronic payments. The company is evolving from just being a card processor to broadening to other types of electronic payment methods, as evidenced by its acquisition of cross- border transfers provider Earthport. This transition expands Visa’s addressable market and helps the company deal with potential disruption from emerging technology and regulatory change.
In what was a year of strong performance, we only had a few negative stock contributors, with insurance provider Prudential being one of the poorer performers. We had previously taken a positive view on the company’s ambitions to segment its conglomerate structure into separate business units. However, the market’s lingering concerns about the resilience and prospects on the US business unit, led the stock to de-rate and underperform. Given our lower conviction in Prudential against other names held in the portfolio and ongoing uncertainty on its US franchise, we decided to exit the position.
Elsewhere, Beazley, the specialty insurer, underperformed because of negative market sentiment over a worsening claims environment in the US ‘casualty insurance’ sector. Waters, the global leader in liquid chromatography characterisation tools (used commercially in analytical chemistry), was weak through the year as signs of end market recovery in late 2018 worsened through 2019. A number of macroeconomic headwinds (most notably Brexit) and regulatory pressures were a drag on growth. The company continues to invest behind new product launches which should contribute to an eventual return to organic growth.”
MNP : Martin Currie Global portfolio holding up well