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Bankers Investment Trust: February 2021 update

In this investment trust update, Investment Analyst Dominic Rowles shares our analysis on the manager, process, culture, cost and performance of the Bankers Investment Trust plc.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

  • Alex Crooke is an experienced manager with a good record of consecutively growing dividends
  • He’s supported by regional experts from across the well-resourced Janus Henderson investment team
  • Long-term performance has been strong, though this isn’t a guide to future returns

How it fits in a portfolio

Bankers Investment Trust aims to deliver income and capital growth by investing in companies around the world. The majority are in developed countries such as the US, the UK and Japan, although it also has exposure to emerging markets, as well as smaller companies, both of which are higher risk. This trust could offer global diversification for an income-focused portfolio.

Manager

Alex Crooke has managed the trust since July 2003. A graduate of Manchester University, Crooke started his career in 1990 as a US equities analyst for Equitable Life Assurance Society. He joined Henderson (now Janus Henderson) in 1994 and is currently co-head of equities - EMEA and Asia Pacific.

The trust is split into six regional sleeves which Crooke delegates to the in-house talent available at Janus Henderson. These six managers are seasoned investors, and each have different areas of expertise which Crooke carefully blends to create a diversified portfolio.

After over 5 years at the helm, Charlie Awdry stepped down as manager of the China portfolio in August 2020. May Ling Wee has taken over these responsibilities and brings with her 24 years of industry experience.

Process

The trust is split into six regional sleeves: UK, Europe (excluding UK), North America, Japan, Asia Pacific (excluding Japan) and China. Each sleeve has its own dedicated manager who is given autonomy to invest where they see fit. While each manager implements their own investment style, what unites them is a focus on companies with strong cash flows.

Crooke is responsible for selecting the underlying managers and choosing how much to invest with each one. He does this based on his view of the economic situation in each area, and which regions can provide sustainable dividend growth. He tends to look at the world with a three to five-year view and positioning doesn’t tend to fluctuate much over the short term. That said, he is prepared to react quickly in response to major economic events such as Brexit or Covid-19.

Asset allocation has changed dramatically since Crooke took charge in 2003. Back then over 50% of the trust’s assets were allocated to the UK. That figure is now closer to 20%. The US market is now the largest regional allocation, followed by the UK and Europe. The trust’s benchmark changed from the FTSE All Share to the FTSE World to reflect the geographical diversification of the portfolio in 2017, although the investment philosophy and process didn’t change.

There was plenty of activity in the portfolio over the past year as the managers rotated out of sectors particularly exposed to Covid-19 such as travel and hospitality. The proceeds were added to a variety of businesses including engineering company Sandvik, and financial services firms Unicredit and Credit Aricole. The team made a new investment in car maker Toyota, which they think has made good progress on the transition to electrification. They also bought LED lighting maker Koito Manufacturing after the share price fell to a level they deemed attractive.

The manager has flexibility to use derivatives and gearing (borrowing to invest) which, if used, adds risk.

Culture

The trust is managed by Janus Henderson Investors, a large investment firm with offices all over the world. It was formed in 2017 from the merger of two long-established groups – US-based Janus Capital Group and Henderson Global Investors.

They value experience, and so fund managers at the group have on average over two decades of investment experience. Sharing knowledge and ideas between investment teams is an important part of the culture. Managers have the flexibility to tap into the wider group’s resources for ideas and insights, but also have the freedom to do their own research and form their own views without having a ‘house view’ placed on them.

Cost

The ongoing annual charge over the trust’s financial year to 31 October 2020 was 0.50%. Investors should refer to the latest annual reports and accounts, and Key Information Document for details of the risks and charging structure.

If held in a SIPP or ISA the HL platform charge of 0.45% (capped at £200 for a SIPP and £45 for an ISA) per annum also applies. The platform charge doesn’t apply if the trust is held in a Fund and Share Account.

Performance

The trust has a good long-term track record. Its net asset value (NAV) has beaten its benchmark by 55.5%* over the past 10 years. Remember, the trust changed its official benchmark from the FTSE All-Share to the FTSE World on 31 October 2017.

Over the year to end of January the trust's NAV rose 11.1% versus 11.8% for the benchmark. The share price rose 12.4% over the same period. At the time of writing, the trust trades on a 0.55% premium to NAV. You should note that past performance is not a guide to the future.

Despite the challenges posed by the pandemic, the dividend per share for 2020 (to end of October) was 21.54p, 3.1% higher than the previous year. The trust currently yields 2%. Please note income is variable and not a guide to the income you’ll received in future.

Positive stock selection in the US, China and Japan helped performance over the year, while a focus on the UK hindered returns. In the US, software company Adobe was a standout performer alongside some of the big tech names such as Amazon and Microsoft. In Japan, dividends have been far more resilient to the challenges posed by the Covid-19 pandemic than some other markets and long-term investments like Sony and Nintendo did well. The China portfolio also performed well with brewing company Chongqing Brewery and solar manufacturer Longi Green Energy Technology boosting returns.

Annual percentage growth
Jan 16 -
Jan 17
Jan 17 -
Jan 18
Jan 18 -
Jan 19
Jan 19 -
Jan 20
Jan 20 -
Jan 21
Bankers Investment Trust 24.2% 29.4% -5.4% 21.9% 12.4%
FTSE All-Share 20.1% 11.3% -3.8% 10.7% -7.5%
FTSE World 33.6% 12.7% 0.9% 17.1% 11.8%

Past performance is not a guide to the future. Source: *Lipper IM to 31/01/2021

Find out more about more about Bankers Investment Trust including charges

Bankers Investment Trust Key Investor Information

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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