Bankers (BNKR ) investment trust has staged a recovery after the majority of its regional portfolios outperformed their benchmark indices, with the exception of Asia Pacific and China.

The £1.2bn global equity trust managed by Janus Henderson’s Alex Crooke delivered a net asset value (NAV) total return of 8.1% over the six months to the end of April, versus the FTSE World index’s 3.5%, according to interim results published last week. The shares returned 5.4%.

The performance marks a strong turnaround after 2022, one of the trust’s most challenging years, driven by an underweight position in the US, an overweight to China, and a lack of exposure to traditional energy stocks.

Since then, Europe and the UK have been the ‘standout’ markets, largely because there was a ‘lack of further bad news’, said Crooke (pictured below). He has since reduced exposure to the UK to 17.1% and brought gearing down to 7%.

The decision to replace Gordon Mackay with Jeremiah Buckley as manager of the US portfolio paid dividends as technology stocks exposed to generative artificial intelligence, including Nvidia and Meta, rocketed. Mike Kerley was appointed deputy to Crooke a year ago. 

Denver-based Buckley repositioned the US portfolio in mid-December with a less-pronounced bias to either value or growth stocks, broadening coverage and exposure to pharmaceuticals and larger financials but fortunately no regional banks. The US is the largest geographic exposure, commanding 38.4% of total assets.

The European portfolio benefited from positive news from the luxury consumer sector and the reopening of China, where companies including Moncler and Hermès derive a large chunk of their profits.

Other notable performers in the portfolio were Microsoft, Sony in Japan, and private equity giant 3i (III ) in the UK.

The Asia Pacific portfolio underperformed its benchmark given the lack of exposure to technology and state-owned companies in China, which were the best performers in the market.

The portfolio is positioned to benefit from the economic recovery under way in Asia and Japan, with almost a third of assets invested there.

Chair Simon Miller cautioned that the uncertain trajectory of interest rates and elevated inflation levels would cause further volatility in equity markets.

Crooke said that although increasing interest rates and bond sales from central banks have had a dampening effect on economic activity, the real economy is weathering these conditions well as a result of low debt levels and pricing power, while consumers are benefiting from wage growth and/or savings.

He added that ‘inflation needs to fall’ because sustained higher interest rates will have a deeper and more widespread impact.

‘There is good evidence that prices are starting to moderate and, in the case of energy, starting to fall. We expect markets in Asia to lead the recovery and are positioned for better news in that region. However, we remain more cautious in other regions,’ he said.

Performance has tailed off in the year to date, with the shares down 2.9% versus the MSCI ACWI’s 5.5% gain, according to Numis data.

The largest positions include Microsoft, Apple and professional services company Accenture, which have respective weightings of 4%, 2.8% and 1.9%, according to the May factsheet.

Numis analyst Gavin Trodd noted that the shares’ 12.5% discount to NAV offers value but emphasised the trust’s medium-term performance was ‘weak’, with three-year shareholder returns of 2.4% well below the MSCI ACWI’s 31.9%.

He added that Bankers does not have a formal buyback policy but bought back shares at an average discount of 9% over the period. Given further widening of the discount post-period end, it was ‘disappointing’ not to see buybacks more recently, he said.

The board has declared a second interim dividend of 0.62p per share to be paid on 31 August, with the full dividend likely to be 7% higher than the 5% originally forecast for 2023. This marks the 57th consecutive year of dividend hikes, making the trust one of the AIC’s dividend heroes.

Three-year performance  

Source: Morningstar