James Carthew: Will Manchester & London’s new dividend fix its discount?
The concentrated tech trust hiked its dividend to 5% last week, but time will tell as to whether it remedies its steep discount.
Manchester & London (MNL) just moved from the Association of Investment Companies’ global sector to its technology sector.
To be honest, this is something that probably should have happened a while ago. Manager Mark Sheppard began to emphasise technology within the portfolio during the trust’s financial year that ended in July 2015, so this is a shift that started over a decade ago.
The rationale for this was a recognition that innovation meant that established business models were being disrupted faster and more dramatically, and that the valuations in the technology sector were not reflecting the potential upside of this.
While the growth selloff that was triggered when interest rates began to rise in 2022 hit the trust hard, the recovery was equally sharp, helped by the rapid advancements in AI, which is a theme that MNL has embraced wholeheartedly. The 10-year annualised NAV return now stands at 18.1%, in line with that of Scottish Mortgage (SMT).
The new peer group makes for tougher competition – the equivalent figures for Allianz Technology (ATT) and Polar Capital Technology (PCT) are 24.9% and 23.6%, respectively. However, MNL does lead the pack over three years.
MNL has a much more… read more here