The Bankers Investment Trust (BNKR) has re-established its trend of long-term outperformance of its benchmark, after a slightly disappointing H218. While the portfolio retains a cyclical tilt, manager Alex Crooke at Janus Henderson Investors has overseen a gradual shift toward more defensive market areas in recent months. The trust’s regional sub-portfolio managers focus on finding well-managed, cash-generative companies whose growing dividends can support BNKR’s own impressive 52-year record of dividend growth. Crooke recognises the delicate balance between positive and negative factors in the global macro picture, and over the past year has taken some profits in highly rated technology names and kept gearing low at c 2–3%. He expects greater clarity on the macro outlook in the second half of 2019, but in the meantime is taking advantage of more attractive equity valuations resulting from the Q418 market sell-off.
Global equity markets, led by the US, are experiencing the longest bull run in history and investors may wonder if there is much more upside to be eked out. World equity indices are heavily dominated by the US and inherently reflect past performance. Given the many sources of uncertainty, a more flexible bottom-up investment approach – with a focus on company fundamentals, valuation, cash generation and dividend growth – has scope to outperform if the cycle turns.
Strong long-term outperformer, already recovering from one-year relative blip. 52-year record of annual dividend growth (the joint-longest of any investment trust) with at least 6% dividend growth forecast for FY19. Access to regional specialist managers from Janus Henderson’s equity teams. Focus on value and income affords a degree of potential downside protection. Geographical allocation much more balanced than global equity indices.
BNKR’s shares have traded in a relatively narrow band versus its NAV over the past 18 months, ranging from a c 4.0% discount to a c 1.5% premium. At 21 March 2019, the shares stood at a 0.9% discount to cum-income NAV, which was narrower than the averages over one, three, five and 10 years, suggesting investor demand remains robust. Following a 52nd year of annual dividend growth in FY18, the shares currently yield 2.3%. Net gearing is relatively low at 3.0%, with potential to rise to c 8% via a combination of long-term debt and a flexible borrowing facility.