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A conservative alternative to Scottish Mortgage? Brunner investment trust is a global fund aiming to deliver long-term income and capital growth

Investment trust Brunner is a global fund with a mission to deliver long-term income and capital growth for shareholders. 

Unlike its more high-profile global rival Scottish Mortgage, which has successfully made investors handsome returns by taking big stakes in firms such as electric car manufacturer Tesla, Brunner’s approach is far more conservative. 

Its modus operandi is as much about mitigating investment risk as it is generating investor returns. 

The result is a long-term investment record that does not look as appealing as that of the Baillie Gifford-managed Scottish Mortgage – over the past five years, the respective returns are 99 and 419 per cent. 

Yet the £369million Brunner, run by investment giant Allianz Global Investors, has its merits. 

Manager Matthew Tillett says: ‘We see it as a one-stop shop for investors who are keen to get exposure to some of the best companies in the world – and with the promise of a mix of dividend and capital return.’ 

The trust’s dividend record is impeccable. It is on course to deliver its 49th consecutive year of dividend rises when it announces next month its final quarterly income payment for the financial year ending November 30, 2020. 

Although the increase is likely to be marginal – an annual payment of just over 20p compared to 2019’s 19.98p – it will be warmly received by shareholders given the collapse in dividend payments across the globe as a result of the pandemic. 

Some of the income paid to investors will be from the trust’s healthy income reserves that have been built up over the years for times just like now when dividends are being cut. 

Tillett runs a 61-strong portfolio with a bias towards US stocks – Microsoft, which last week reported record quarterly profits, is its biggest position. 

But apart from ensuring the trust is diversified across markets and industrial sectors – and no individual holding is too dominant – it’s all about stock selection. 

‘We invest in quality growth companies from around the world,’ says Tillett, ‘some of which will pay an income, some not. We then look to see whether they can be bettered by companies we have done due diligence on, but have yet to buy for the portfolio.’ 

The result is an eclectic fund, comprising traditional income-paying stocks such as Unilever and National Grid, and businesses which do not pay a dividend – such as US travel company Booking Holdings (more commonly known as Booking.com) and robotics surgery specialist Intuitive Surgical.

Since last March, Tillett has fine-tuned the portfolio to take account of changes in consumer and corporate behaviour that he believes will be permanent. 

Out has gone UK exhibition business Informa and in has come Booking, Spanish IT company Amadeus, US derivatives specialist CME and UK housebuilder Redrow.


Tillett is concerned there are signs of ‘speculative investor behaviour’ in certain sectors of world stock markets – for example, electric vehicles and software.

Valuations in these areas, he says, ‘look a bit stretched so investors should be cautious’. Yet he believes global equities are not in a bubble and that there are lots of companies in sectors ‘that are sensibly priced’. ‘We must concentrate on these stocks,’ he says. 

The trust, originally formed 95 years ago to manage the private wealth of the Brunner family (famous industrialists), has annual charges totalling 0.67 per cent. Its stock market identification code is 0149000 and its shares finished Friday at £8.56, trading at an attractive double-digit discount to the value of the trust’s assets.

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