Investment Trusts

If u want to own a portfolio of Trusts but don’t know where to start a holding in CMPI could be a good place to start as u increase your knowledge base.

Overview
Easing rates may act as a catalyst for CMPG’s and CMPI’s underlying holdings to re-rate… Kepler

Overview
CT Global Managed Portfolio Trust (CMPG/CMPI) is a well-diversified and benchmark-agnostic trust of investment companies strategy. The trust boasts two separate share classes: one is focused on generating capital growth, and the other on income. This dual share-class structure offers investors an annual opportunity to exchange between share classes at net-asset value, without currently incurring any additional costs or UK capital gains tax.

The trust is managed by long-standing investment trust specialist Peter Hewitt. As discussed in Portfolio, Peter has been positioning the portfolios to capture the extreme value found across the investment trust universe and increasing his exposure to key secular-growth themes he believes will drive long-term returns. These themes include technology and technological innovation, alternative sources of growth and income through assets in private equity and infrastructure sectors, and the absolute and relative value available across UK equities. Having exposures to these themes negatively impacted performance over the past couple of years as high interest rates weighed on investor sentiment and saw discounts widen. However, since the end of October 2023 expectations of easing rates and a softer landing have seen the growth portfolio show early signs of a rebound.

As discussed in Discount, both share classes trade close to par, thanks to the discount-control policy, which has seen the board actively buying back and issuing shares when appropriate. The trust’s income share class also offers an attractive yield of 6.9%, which benefits from an income transfer mechanism between the two share classes .

Analyst’s View
Since the end of October 2023, rising optimism around easing macroeconomic conditions and interest-rate cuts towards the end of 2024 has contributed to CMPG outperforming the benchmark. In our view, the combination of improved investor sentiment and a narrowing of discounts across some of the hardest-hit sectors of the past couple of years could see this trend continue. As a result, we believe Peter’s increased exposure to these areas and to secular-growth themes could pay off – as they have in the past in the right environment.

We think CMPI’s high yield of 6.9% is particularly attractive, even when compared to the competitive yields currently available elsewhere in the market. The support provided by the income-transfer mechanism, the trust’s own revenue reserves and the reserves of the underlying trusts also offer some security on future dividends. Furthermore, we think the trust’s income is likely to benefit from Peter’s increased allocation to alternatives. We also think the ability for investors to transfer between the trust’s income and growth shares makes it a suitable candidate to be a ‘core’ strategy, perhaps amongst a broader portfolio of assets, which allows investors to reallocate as their investment needs evolve over the long term.

Bull
Income share class has an attractive and well-supported yield
Exposure to secular-growth themes may re-rate as macroeconomic conditions ease
Annual share class conversion facility allows shareholders to change portfolio requirements cheaply

Bear
Gearing on underlying trusts and income share class can exaggerate downside risks, as well as upside
Performance may lag if tighter macroeconomic conditions and negative investor sentiment persist
Trust of investment companies structure leads to higher look-through charges.

CMPI

ACTIVITY BREAKDOWN
Top 10 Holdings

Law Debenture Corp (The) PLC 4.6%
NB Private Equity Partners Class A Ord 4.5%
JPMorgan Global Growth & Income PLC 4.2%
Murray International Ord 3.8%
CC Japan Income & Growth Ord 3.6%
Mercantile Ord 3.5%
3i Infrastructure Ord 3.5%
Scottish American Ord 3.3%
Merchants Trust Ord 3.3%
Greencoat UK Wind 3.2%

U would own a finger nail in each of the above plus many others available to view on their website.

Another good source of information TrustNet.