MITON GLOBAL OPPORTUNITIES: The trust with its finger in lots of profitable pies!
Investment trust Miton Global Opportunities is unusual in that it only invests in other stock market listed investment trusts. It routinely ignores all other investments and company shares.
It might seem all too focused, all too niche, a ‘trust of trusts’. But its potential universe is surprisingly broad and wide, encompassing nearly 400 investment trusts listed on the London Stock Exchange with combined market capitalisations approaching £143billion. Big numbers. Wide choice.
Its modus operandi is to identify rival trusts it believes are on the cusp of a turnaround, and where there is a disconnect between the share price and the value of the underlying assets (in other words, the trust’s shares do not fully reflect the value of the underlying assets and trade at a discount).
Miton Global Opportunities only invests in other stock market listed investment trusts
If Miton gets its analysis right, the rewards for its shareholders are twofold. The value of the trust’s investments improves on the back of turnaround – and their share prices are given an extra fillip as they move more in line with the value of their underlying assets. Of course, if it gets it wrong, it can end up holding investments going nowhere.
It’s an approach requiring plenty of painstaking analysis, which probably explains why the trust has two managers standing four square behind it – longstanding investment trust expert Nick Greenwood and more recent recruit Charlotte Cuthbertson.
Although the trust has underperformed the FTSE All- Share Index over the past year, its five-year record is superior, registering returns of 72 per cent against the index’s 36 per cent.
Cuthbertson describes the trust as an ideal ‘diversifier’, for it has stakes in 35 investment trusts which in turn have holdings in a range of companies or assets. The overall effect of this diversification is a trust with international exposure to a broad church of assets – not only equities, but property, private equity and mining.
Despite some of its unusual holdings – for example, Phoenix Spree Deutschland (investing in German residential property) – Cuthbertson says the result is a trust lower in risk than the UK stock market and one where the main thrust is on generating conservative returns.
It invests in nearly 400 investment trusts listed on the London Stock Exchange
When identifying investments to buy, Miton looks for potential ‘catalysts’ that might trigger a rally in a trust’s share price.
These could result from a new manager improving returns, or an investment sector coming back into favour. If it feels a catalyst is likely to happen and it can buy the trust’s shares at an attractive discount to their asset value, it will take a stake.
Last month, Miton bought shares in London-listed trust Vietnam Enterprise Investments. Cuthbertson said the trust’s shares were sitting at an attractive double-digit discount, providing Miton with the opportunity to make money if it narrows in the future. Plus, Miton likes Vietnam as an emerging market.
Cuthbertson says: ‘Manufacturing is moving from China to Vietnam to benefit from lower costs and the economy is in growth mode.’
It already has a position in rival trust VinaCapital Vietnam Opportunity. Before making the investment, Cuthbertson went out to Vietnam to meet with the trust’s managers – Dragon Capital – to run a thorough rule over them. At 1.4 per cent, the ongoing charges on Miton Global Opportunities are on the high side.
Stock Exchange codes: Miton Global Opportunities (3436594), Phoenix Spree Deutschland (BVG2VP8), Vietnam Enterprise Investments (BD9X204), VinaCapital Vietnam Opportunity (BYXVT88).