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Edinburgh Investment Trust: June 2021 update

Senior Investment Analyst David Holder shares our analysis on the manager, process, culture, cost and performance of the Edinburgh Investment Trust.

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.

  • James de Uphaugh is an experienced investor and co-founder of Majedie Asset Management
  • He is part of a well-resourced and collegiate team at Majedie
  • The focus is on providing a balance between longer-term income and capital growth

How it fits into a portfolio

Edinburgh Investment Trust invests mainly in larger UK companies with an aim to provide a balance of long-term income and capital growth. It could therefore fit as part of an income-focused investment portfolio or add exposure to larger UK companies in a broader, diversified portfolio.

Investors in closed-ended funds should be aware the trust can trade at a discount or premium to NAV.


Edinburgh Investment Trust has been managed by Majedie Asset Management since March 2020 when it was appointed by the board to replace the previous trust manager. James de Uphaugh is the lead trust manager with Chris Field his deputy.

Uphaugh is Chairman and Chief Investment Officer of Majedie. Before co-founding Majedie in 2002 he was a Managing Director at Mercury Asset Management (subsequently acquired by Merrill Lynch and now BlackRock). He was Chairman of the UK Investment Group and Alpha Team Leader having joined Mercury Asset Management in 1988. Uphaugh has been involved with the management of the flagship Majedie UK Equity fund since launch in 2003. This fund focuses on capital growth rather than income.

Field is the deputy trust manager and Executive Director of Majedie. Before co-founding Majedie in 2002 he was a Director at Mercury Asset Management. He joined Rowan Investment Managers (a predecessor firm to Mercury Asset Management) in 1980.

The managers are part of Majedie’s wider investment team of 17 including fund and trust managers, analysts and responsible investment specialists. There is an embedded culture of ideas sharing, diversification of thought, collegiate interaction and peer challenge. This ensures that only the best ideas from across the whole team are incorporated into the trust.

As with any investment trust the board oversee the management of the company for its shareholders. With seven members it has a broad range of financial and investment experience which should ensure it’s able to hold the trust managers to account.


Edinburgh Investment Trust mainly invests in larger UK companies with a small allocation to overseas companies. The objective is for returns to come from a balance of both long-term capital and income growth. This approach limits the reliance on either income or capital to drive returns which could result in a smoother ride. The trust tends to be concentrated with around 40-50 holdings. This means each one can have more of an effect on performance, though this approach increases risk.

Uphaugh is not wedded to a single investment style. He looks for good quality companies that are attractively valued and can be bought at a share price he believes is below the company’s worth. He also invests in companies growing strongly, or going through a restructuring or recovery. He also considers the state of the economy, geopolitical developments, as well as company specific characteristics when making investments. He is patient and aims to invest for the long term, which means he doesn’t buy and sell companies frequently.

The trust is currently invested with the aim to benefit from improving prospects for UK companies from the post-COVID domestic recovery. It invests in high-street baker Greggs and soft furnishings provider Dunelm. It also holds companies that carry out business globally such as Anglo American and Unilever. Finally, there are UK companies that the manager thinks look better value than overseas peers and these include Tesco and Diageo.

The team expects the UK and global economy will continue to recover strongly and invest in companies best placed to benefit. They aim to maintain a balance though and have added to companies they think could prove more resilient and look good value such as food retailer Tesco.

There are a number of themes in the trust such as “sustainability drivers” with a new holding in Polypipe, which facilitates environmental improvements in residential and commercial buildings. “Darwinism” is another theme. This describes strong companies maintaining and gaining market share due to their competitive advantage. A new investment in government outsourcer Serco fits in this category. Finally, “cost curve leadership driving superior returns” describes companies that have an element of pricing power. This means they can increase the prices of goods and services without impacting consumer demand. Caterer Compass Group is an example.

The trust can borrow money to invest with the intention of increasing returns (known as gearing), but this could magnify losses in a falling market and increases risk. The manager can also use derivatives, which if used adds risk. The level of gearing at the end of May was 5%. In addition, there may be some investment in smaller companies which, by their nature, can be higher risk and illiquid investments.


Majedie is largely an employee owned business which was founded in 2002. It manages money for both institutional and retail clients with a focus on UK, US and Global equity funds.

ESG (Environmental, Social and Governance) factors have become increasingly prominent within the investment community over recent years. Majedie fully incorporates ESG factors into their company analysis. They are committed to ensure that investors’ capital is put to work where it can have the maximum benefit for society and the environment. It is important to them that they engage with management to improve how the company addresses these issues. As long-term investors, these considerations have arguably become even more important.


The annual ongoing charge to March 2021 was 0.55%. Investors should refer to the latest annual reports and accounts, and Key Investor Information Document for details of the risks and charging structure.

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

Part or all of the annual charge is taken from capital rather than income generated, increasing the potential for your investment’s capital value to be eroded.


The trust has performed well over Uphaugh’s tenure since March 2020 albeit this is a short period. His longer-term record as a fund manager is robust although this shouldn’t be taken as an indication for future returns and past performance is not a guide to the future.

In the first half of 2020, to 30 June, the trust’s share price fell 25.9% compared to -17.5% for the FTSE All Share. Companies whose prospects were linked to the health of the economy (cyclical sectors) were in the eye of the storm and fared the worst, such as travel & leisure, banks and oil. The trust’s holdings in insurer Direct Line, defence company BAE Systems and food retailer Tesco detracted the most in the second quarter of 2020. In addition, the gearing detracted from returns.

The second half of 2020, to 31 December, saw markets recover. Positive signs of a COVID vaccine, a Biden victory in the US presidential election and the perceived resolution of Brexit helped to improve investor sentiment. Some of the more cyclical sectors such as mining, travel & leisure and general retailers performed strongly whilst healthcare, utilities and oil & gas underperformed. In this period the trust returned 17.7% vs the FTSE All Share return of 9.3%. This is too short a period however on which to judge a trust’s performance. Holdings in basic materials engineer Weir Group, bank NatWest and miner Anglo American helped performance.

Over 12 months to the end of May 2021, the trust returned 39.6% in share price terms vs the FTSE All Share return of 23.1%. The bulk of the outperformance occurred after the discovery of an effective COVID vaccine in Q3 2020. In this environment companies most sensitive to growth in the economy performed well. In the year to the end of March 2021, holdings such as the industrial/construction rental company Ashtead Group and industrial electronic solutions provider Electrocomponents did well. Holdings in defence provider BAE Systems, Tesco and medical devices company Smith & Nephew were the largest detractors. The team retain conviction in these companies. With regards to BAE Systems, geopolitical instability should be supportive, Tesco has been gaining market share and Smith & Nephew is close to overcoming issues surrounding its joint replacement systems.


Income trusts had a tough 2020 as the COVID pandemic severely impacted many companies’ ability or willingness to pay dividends. UK stock market dividends fell 33% in 2020. Overall larger companies fared better than smaller companies, and some sectors were impacted worse than others. The travel & leisure industry was severely impacted by travel restrictions, while banks were forced to withhold dividend payments by the Prudential Regulation Authority.

Against this backdrop the trust’s revenue fell 42% in the year to the end of March 2021 vs 34% for the FTSE All Share. Investors should expect the trust to provide a yield similar to that of the wider market although yields are variable, and are not a reliable indicator of future income. In the financial year to the end of March 2021 the trust paid dividends totalling 28.65p per share (2020: 28.65p). The trust could do this by using revenue reserves. These are used by investment trusts to help boost income during tough times for the market.

Annual percentage growth
May 16 -
May 17
May 17 -
May 18
May 18 -
May 19
May 19 -
May 20
May 20 -
May 21
Edinburgh Investment Trust 14.0%* -8.5%* -14.0%* -22.9%* 39.6%
FTSE All-share 24.5% 6.5% -3.2% -11.2% 23.1%

Past performance is not a guide to the future. Source: Lipper IM to 31/05/2021. *Please note the current trust manager has managed the trust since March 2020.

Please note this trust holds shares in Hargreaves Lansdown plc.

Find out more about Edinburgh Investment Trust including charges

Edinburgh 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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