Diverse Income (DIVI)

Performance

The £296m portfolio run by Premier Miton’s Gervais Williams and Martin Turner lagged its Deutsche Numis All Share benchmark in the six months to end of November, delivering a net asset value (NAV) total return of 8.5% versus the index’ 12.5%.

The portfolio tilt towards smaller companies held it back over the half year, although since the end of the period, absolute performance has resumed, with a NAV total return of 10% to 4 February versus a 7.5% rise in the index.

The dividend was increased to 2.15p per share in the six months versus 2.05p in the same period last year.

Portfolio changes

Williams and Turner took profits in Pan African Resources and Thor Exploration following a strong run in gold mining stocks, while they exited the Greatland Gold holding entirely. There is still a large weighting to miners as copper miner ACG Metals was purchased in the period.

Financials were also trimmed, with the pair selling out of asset manager Aberdeen, reinsurer Conduit Holdings, and XPS Pensions. Additionally, pawnbroker H&T and retirement solutions provider Just Group were taken over.

New holdings include property investors Land Securities and Primary Healthcare Properties (PHP), as well as waste service supplier Pennon.

The manages too the ‘unusual’ step of investing outside of the UK, adding two European-listed stocks: Norwegian oil and gas company BlueNord and French energy group Engie, as ‘their valuations are even more out of line with their fundamentals than their UK equivalents’.

Corporate activity

The board is considering a number of initiatives to tackle the persist discount the trust trades at, which is currently 7.5%. This includes replacing the annual redemption with an annual share buyback policy, combined with regular continuation votes.

There is also the more radical idea being floated to ditch its London listing in favour of an open-ended fund structure operating the same investment mandate.

Outlook

The outsize returns from the ‘Magnificent 7’ stocks means investors are ‘currently tolerating large stock specific and industry sector correlation risks’ but returns are broadening out and soon ‘these risks will come to be seen as unacceptable’.

‘UK small-caps and the broader market are poised for a prolonged period of outperformance,’ said the pair.

‘If we are able to add value through stock selection as we have done I the past, then that will further enhance the trust’s returns. In combination, we believe the prospects for the trust’s strategy are the best they have been for decades.’

Brunner (BUT)

Performance

The £709m global portfolio reported a NAV total return of 9.2% for the 12 months to end of November, falling behind its composite benchmark of 70% FTSE World ex UK and 30% FTSE All Share, which returned 15.8%.

The ongoing concentration of returns in a narrow group of mega-cap technology stocks was blamed for the lag, as managers Julian Bishop and James Ashworth focused instead on protecting capital through diversification avoiding excessive concentration in a single theme or style.

The ‘all-weather’ approach does not mean the portfolio is not exposed to artificial intelligence, but has chosen to participate ‘through a diversified set of holdings that capture genuine value creation without excessive speculation’.

This includes holdings in semiconductor stalwarts TSMC and ASML and electric connector and cabling group Amphenol.

‘These companies have performed well and are essential to the AI infrastructure build-out,’ said Brunner chair Carolan Dobson.

‘Additionally, the trust holds a substantial position in Alphabet, which is at the forefront of the large language model race and is a leading designer of its own AI chips. These holdings have provided meaningful exposure to the AI opportunity while maintaining the portfolio’s quality and diversification standards.’

This approach to technology was ‘vindicated’ when this part of the market faltered in the final quarter of the year on the back of concerns about whether companies could deliver on expectations.

Income focus

The trust has an income focus and paid a total dividend for 2025 of 25p per share, an increase of 5.3% on the previous year’s dividend of 23.75p. Earnings for the year rose 1.8% to 27.9p meaning the dividend was fully covered and the board could also contribute to the revenue reserves.

The trust has delivered 53 years of consecutive dividend increases, putting it firmly in the Association of Investment Companies’ ‘dividend hero’ category

Team changes

Over the year, the board appointed James Ashworth as co-lead manager alongside Julian Bishop. Ashworth had been deputy manager since early 2024.

Christian Schneider and Simon Gergel continue to provide investment support as deputy managers.

Outlook

Dobson said 2026 has started amid uncertainty, with geopolitical uncertainty, and the path of inflation remaining murky, making an ‘all-weather’ portfolio more important than ever.

‘Amid all the macro uncertainty, the portfolio remains constructed from bottom-up stock pikcs, seeking diverse opportunities from individual companies,’ she said.

‘We remain cognisant of the effect that external factors could have on the portfolio of companies, but we are not trying to predict outcomes or have investment decisions guided in a wholesale fashion by those factors.’

Syncona (SYNC)

Proposals

The £1bn life sciences portfolio has proposed a new investment policy after backtracking on its plans for a wind-down.

As the biotech markets roared back to life, the Guernsey-based fund has published a circular setting out proposals for a new investment and capital allocation policy that it first flagged in October.

It has resurrected plans to return £250m to shareholders via a tender, buyback or special dividend, and limiting investments in early-stage companies to 5% of NAV, as well as aligning management incentives with realisation of portfolio assets.

The largest shareholder in Syncona, The Wellcome Trust which owns 30.6% of voting rights, has said it will back the proposals at the vote in March.

What the board says

Melanie Gee, chair of Syncona, thanked shareholders for their ‘constructive engagement’ on the strategic process.

She said the proposals provide ‘the opportunity to support our portfolio, whilst maximising potential cash returns from our later stage assets over the short to medium term’.

‘We are also committing to consult with shareholders on revisiting the investment objective and policy after two years or the return of £250m, whichever is the earlier,’ she added.

‘Accordingly, the board recommends shareholders vote in favour of our proposals.’

Bellevue Healthcare (BBH)

Proposals

The £104m trust, which has shrunk dramatically in the wake of bumper buybacks, has published a circular in relation to the proposed appointment of Columbia Threadneedle as investment manager, taking over from Bellevue Asset Management’s Paul Major and Brett Darke.

To sweeten the deal, shareholders are being offered a 100% tender at 2% discount to NAV, but the board has warned that if too many shareholders head for the exit and the NAV falls to under £55m, Columbia Threadneedle has three months to resign.

The trust will be overseen by Columbia Threadneedle’s healthcare manager Kosta Kleyman who will adopt the diversified long-short hedge-fund style strategy used in his ‘Seligman healthcare strategy’.

The trust will also change name to CT Healthcare, and the current redemption facility and zero discount policy will also be replaced with quarterly tender offers capped at 15% a quarter.

Fee changes

Under the new managers, fees will be moved from a percentage of NAV to market capitalisation, which runs counter to the trend in the trust industry to better align with shareholders with a market-cap based fee.

A performance fee will also be introduced subject to a three-month SONIA (sterling overnight index average) hurdle.

What the board says

Kate Bolsover, chair of BBH, said the appointment of Columbia Threadneedle ‘provides a highly differentiated and compelling opportunity to deliver long-term risk adjusted shareholders returns from the healthcare and biotech sector’.

The board is unanimously recommending that shareholders vote in favour of the resolutions.

What the analyst says

Winterflood Securities’ Alex Trett said investors ‘may have some concerns regarding the relatively short track record of the strategy, as well as the new fee arrangement’.

‘However, the decision to offer a one-off 100% tender provides shareholders with a full exit opportunity ahead of the proposed transition and is a positive governance measure that we suspect will be particularly welcome for investors who already have dedicated pure-play biotech exposure within their portfolio,’ he said.

Invesco Bond Income Plus (BIPS)

Fundraise

In a sector that has been buying back shares with abandon, the £453m BIPS trust has bucked the trend, raising £25m in a share issue prices at a 0.75% premium to NAV.

More than 6.6m shares were purchased in the WRAP retail offer, equal to 46% of the total 14.4m shares issued. The remainer were taken up by institutional investors.  

The raise grew the company by a modest 6% but there is scope for more of the same after shareholders gave approval for BIPS to continues its share issue programme, adding another 20% to its market capitalisation over the next year.

Shareholders were no doubt attracted to the raise by the 7% yield being offered by BIPS.

What the analysts say

Trett said new issuance has been ‘particularly challenging’ in recent years and the majority of trusts continue to trade at sustained discounts versus BIPS 1.1% premium.

In an ‘ever-increasing demand for scale’ within the trust sector, the ‘ability to issue shares at a premium in order to grow is noteworthy’.

‘The combination of a placing and a retail offer also highlights solid demand across multiple segments of the investor base,’ said Trett.

‘Notably, the c.£11.5m raised via the WRAP retail offer marks the first capital raise in the investment trust sector since the removal of the €8m prospectus threshold for retail participation in placings.’