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Gearing introduced

10% gearing announced.

On 23 November, the Board of Martin Currie Global Portfolio Trust plc announced the introduction of gearing.

Investment trusts benefit from the ability to ‘gear’ which allows the Company to borrow money to invest in the market. Gearing can magnify investment returns, particularly in rising market conditions and the belief is that long-term gearing will enhance shareholder returns, albeit this is not guaranteed.

The loan facility is a three-year deal of £30 million which represents about 10% of the current net asset value of the company and the full amount was invested on 24 November 2020.

As ‘structural’ gearing, the additional capital will be deployed on a pro-rata basis across the current portfolio of 30 high-quality companies. This maintains the shape of the portfolio and avoids market timing issues.

This is another endorsement for Martin Currie’s high-conviction investment strategy and the approach of Zehrid Osmani, who was appointed Portfolio Manager on June 2018. Osmani has introduced a more structured research framework, a stricter focus on high-quality companies and employed greater scrutiny of ESG characteristics to ensure exposure to sustainable business models in the long term. This has resulted in a higher conviction, concentrated portfolio.

Morningstar has awarded Martin Currie Global Portfolio Trust the highest 5-star rating for performance and the maximum 5 globes Sustainability Rating.

The trust features in the top of the AIC Global sector rankings and was the top performer of 2019  .

The rising popularity has resulted in the Company regularly issuing shares from Treasury to meet the market demand for high-alpha, active portfolios that are genuinely distinctive.

Neil Gaskell, Chairman, Martin Currie Global Portfolio Trust commented:

“The Board is pleased to announce a modest level of gearing which we believe to be in the best long-term interests of our shareholders. It is also an endorsement of Zehrid Osmani and his team at Martin Currie who have consistently delivered impressive returns for our shareholders. The Board is keen to utilise the structural benefits of investment trusts and gearing has proven to be a major advantage for trusts in this sector over the long term.”

Zehrid Osmani, Portfolio Manager, stated:

““We welcome the Board’s decision to introduce gearing for the portfolio. Gearing is a structural tool that offers the potential to enhance shareholders’ returns over the long term. We can increase exposure to stocks that our fundamental research process identifies as sustainable, quality growth companies.”

Further information is available in the RNS statements issued to the London Stock Exchange on 23 November 2020 and 24 November 2021.

GPT 12-month performance

Past performance is not a guide to future returns.

Source: Martin Currie. The NAV basis used is cum-income in £. Please note prior to July 2017 the NAV basis used was ex-income NAV in £. Ex-income NAVs exclude current-year income, while cum-income NAVs include current-year income. These figures do not include the cost of buying and selling shares in an investment trust. If these were included, performance figures would be reduced.

Prior to 1 February 2020 the Trust's benchmark was the FTSE World index and the MSCI All Country World Index (ACWI) thereafter.


Regulatory information and risk warnings

This information is issued and approved by Martin Currie Investment Management Limited, authorised and regulated by the Financial Conduct Authority. It does not constitute investment advice. Market and currency movements may cause the capital value of shares, and the income from them, to fall as well as rise and you may get back less than you invested.

The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the security transactions discussed here were, or will prove to be, profitable.

Investment trusts may borrow money in order to make further investments. This is known as 'gearing' and can enhance shareholder returns in rising markets but, conversely, can reduce them in falling markets.

Past performance is not a guide to future returns.

The information contained has been compiled with considerable care to ensure its accuracy. However, no representation or warranty, express or implied, is made to its accuracy or completeness. Martin Currie has procured any research or analysis contained in this document for its own use. It is provided to you only incidentally and any opinions expressed are subject to change without notice.

This article does not form the basis of, nor should it be relied upon in connection with, any subsequent contract or agreement. It does not constitute, and may not be used for the purpose of, an offer or invitation to subscribe for or otherwise acquire shares in any of the products mentioned.

The opinions contained in this recording are those of the named manager. They may not necessarily represent the views of other Martin Currie managers, individuals, strategies or funds. These opinions are not intended to be a forecast of future events, research, a guarantee of future results or investment advice.

The analysis of Environmental, Social and Governance (ESG) factors form an important part of the investment process and helps inform investment decisions. The strategy does not necessarily target particular sustainability outcomes.

Shares in investment trusts are traded on a stock market and the share price will fluctuate in accordance with supply and demand and may not reflect the value of underlying net asset value of the shares. The majority of charges will be deducted from the capital of the company. This will constrain capital growth of the company in order to maintain the income streams.

© 2020 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Morningstar rating as of 25 November 2020.