Shares Magazine – August 15, 2019

(Axel Boer) #1

INVESTMENT TRUSTS


28 | SHARES | 15 August 2019


conditions, among them FTSE
100 publishing powerhouse RELX
(REL), consumer goods colossus
Unilever (ULVR), alcoholic
drinks giant Diageo (DGE) and
beverages-to-biscuits maker
Mondelez International.
With technology continuing to
rapidly expand its addressable
market, portfolios offering
exposure to its secular growth
themes remain popular and
inhabit the ranks of the FTSE 350.
Run by Ben Rogoff is another
running Great Idea, namely
Polar Capital Technology Trust
(PCT), a benchmark-beating fund
flush with most of the world’s
best-known companies, among
them Google parent Alphabet,
Microsoft and Apple.
Currently trading at a 6.9%
discount, the trust also offers
exposure to big Chinese
technology growth names
Tencent and Alibaba, as well
as less widely known software
stocks including Twilio, New Relic
and Alteryx.
Sitting on an even wider 17.2%
discount is Herald Investment
Trust (HRI), a backer of smaller
quoted companies in the areas
of communications, multi-
media and technology that has
dramatically outperformed the
Numis Smaller Companies plus
AIM ex. Investment trusts and
Russell 2000 Tech Index since
inception.
Other denizens of the FTSE 350
include Law Debenture (LWDB),
yet another of our Great Ideas
selections. Half year results (24
Jul) revealed a good start to 2019
for the investment trust which
looks for quality companies
with the potential for long-term
growth and which have been
mispriced by the market.

FIVE TRUSTS TO BUY

FIDELITY SPECIAL VALUES
(FSV) 244P
Discount – 3.1%
AIC Sector – UK All Companies

Fidelity Special Values (FSV)
is an all-cap fund with a value-
contrarian philosophy managed
by well-followed Alex Wright,
who remains very positive on
the opportunities available
to contrarian investors in a
deeply unloved UK market.
The £676.9m cap trust buys
beaten up companies in out-
of-favour sectors and holds
them until their potential
value is recognised by the
wider market. Wright’s day job
entails researching and meeting
the management teams of
companies, looking for those that
offer some degree of downside
protection but also ‘potential for
a positive change to show them
in a new light’. Increased clarity
on the UK’s exit from the EU
could trigger a material re-rating
of UK-listed companies and a
boost for the portfolio, which
is invested in the likes of Royal
Dutch Shell (RDSA) and Royal
Bank of Scotland (RBS) as well
as tobacco stock Imperial Brands
(IMB) and the educational
publisher Pearson (PSON).

BLACKROCK SMALLER
COMPANIES (BRSC) £13.08
Discount – 10.5%
AIC Sector – UK Smaller
Companies

Popular with investors for its
stellar long-run track record yet
trading on a 10.5% discount
nonetheless, BlackRock Smaller
Companies (BRSC) is now
managed by Roland Arnold,
who became lead manager on
the retirement of Mike Prentis
this summer. The transition
should prove seamless as
Arnold had worked with Prentis
since 2004 and will stick with
Prentis’ tried-and-tested
quality growth bias approach.
BlackRock Smaller Companies
is a diversified portfolio of
high-quality companies that
have the potential to become
much bigger. The focus is
on companies with proven,
trustworthy management,
strong market positions, a clear
record of earnings growth, good
conversion of earnings into cash
and a sound balance sheet.
Currently passing muster with
Arnold are the likes of polling
outfit YouGov (YOU:AIM),
high-flying media group Future
(FUTR), 4imprint (FOUR) and
patent translation expert RWS
Holdings (RWS:AIM).
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