Tech names and a tailwind from Far East markets powered the outperformance of F&C Managed Portfolio Trust (FMPG) in the six months to 30 November 2017, a period that builds on the investment company’s impressive long-term track record.
Chairman Richard Martin appears optimistic on the outlook for 2018, though investors might heed his warning markets have ‘had a remarkable run since the great financial crash nearly ten years ago’, that ‘geo-political risks abound’ and ‘valuations in certain markets, especially the US are elevated.’
A CLASS APART
F&C Managed Portfolio Trust is unusual in having two classes of shares - Income shares, traded under the ticker FMPI, and Growth shares (FMPG) - with distinct investment objectives, policies and underlying asset portfolios.
Half year results reveal net asset value (NAV) total returns of 6.3% for the Growth shares and 2% for the Income shares over the six months, comfortably ahead of the 0.2% decline from the FTSE All-Share Index, the benchmark for both portfolios.
Its portfolio contain a variety of third party investment trusts.
Within the Growth Portfolio, performance was led by exposure to Japanese and Asia Pacific markets and the biotechnology and technology sectors.
Japan’s stock market surged ahead following the re-election of Prime Minister Abe in October, a boon to long time holding Baillie Gifford Japan Trust (BGFD), where the focus on medium and small growth companies in Japan drove the trust’s 27% share price gain.
The value of its holding in Schroder Asian Total Return Investment Company (ATR) rose 20%, buoyed by strong performances from a number of Asia Pacific region markets.
STAR TURN SYNCONA
The star turn in the biotechnology and technology sector was Syncona (SYNC), whose shares were boosted following the successful NASDAQ listing of major holding Nightstar, a gene therapy company on a mission to treat inherited blindness.
Other impressive Growth portfolio performers included the Walter Price-managed Allianz Technology Trust (ATT) and Katie Potts’ Herald Investment Trust (HRI), another long-time holding whose shares appreciated 19% thanks to its exposure to smaller UK tech companies.
Growth portfolio laggards included Woodford Patient Capital Trust (WPCT) whose share price discount to asset value widened, as well as Perpetual Income & Growth Investment Trust (PLI), hit by the poor share price performance of doorstep lender Provident Financial (PFG).
BOOST FROM BB BIOTECH
Over in the Income portfolio, a series of new products and attractive valuations in US biotechnology companies saw Zurich-listed BB Biotech rise 15%, while CC Japan Income and Growth Trust (CCJI), which Shares wrote about in detail here, also benefited from the buoyant Japanese markets.
New issue Jupiter Emerging & Frontier Income Trust (JEFI) has gotten off to a strong start due to good stock selection, while The Bankers Investment Trust (BNKR) was also a notable performer.
As for F&C Managed Portfolio Trust, it has delivered performance ahead of its benchmark over one, three and five years to 30 November 2017 and since launch on 16 April 2008.
CAVEAT EMPTOR
Richard Martin says ‘the global outlook for equity markets remains constructive; although it would be wrong to ignore that markets have had a remarkable run since the great financial crash nearly ten years ago and that geo-political risks abound.
‘Valuations in certain markets, especially the US are elevated. However, neither age nor valuations are, when viewed in isolation, reasons why further positive returns cannot be achieved.’
Martin adds: ‘The economic recovery has broadened out through Europe, Asia Pacific and many emerging markets.
‘Globally, corporate earnings growth is strong and looks likely to continue in robust fashion into 2018.
‘Although monetary policy is tightening in the US this has been well flagged and is gradual, whilst elsewhere it remains stimulative and supportive of equity markets.
‘There are risks, which warrant a cautious approach with regard to strategy and investment selections, where the focus will remain on the best quality investment companies for both portfolios.’
