The Bankers Investment Trust (BNKR) invests globally, with the aim of generating higher long-term total returns for its largely UK investor base than it could have achieved in its home market. Share price and NAV returns are ahead of the benchmark FTSE All-Share Index over both the short and longer term, with annualised NAV total returns of more than 15% pa over five years. BNKR also aims to grow its dividend ahead of inflation, and has the second-longest record of unbroken dividend growth of any investment company, on track for a 51st year in FY17. Lead manager Alex Crooke, at the helm since 2003, has slightly reduced the North America allocation as leading economic indicators begin to look less favourable, diverting resources to European portfolio manager Tim Stevenson, who is finding good value opportunities particularly among financial stocks.
BNKR aims to achieve long-term capital appreciation and above-inflation dividend growth by investing across the world in attractively valued, cash-generative companies that themselves pay growing dividends. Lead manager Alex Crooke sets the geographical allocation and the level of gearing, and is also responsible for UK stock selection. Regional portfolios are managed by specialists from across the Janus Henderson stable. All the managers have a bottom-up approach to stock selection, and a broadly ‘value’ investment style, and while the overall fund is diversified, each regional portfolio is concentrated and high-conviction.
Many stock market indices around the world have reached new all-time highs in recent months, and markets in aggregate look expensive (the DS World Index has a 12-month forward P/E 19% above its 10-year average, for instance). However, pockets of value still remain, and a flexible approach to geographical allocation could help offset specific geopolitical and policy worries in the near term.
At 28 September 2017, BNKR’s shares traded at a 2.4% discount to cum-income NAV, narrower than short-term averages and only modestly wider than the 12-month low of 1.9% reached in February. The valuation is supported by a 2.2% yield (based on the last four quarterly dividends), and the chairman has guided that the dividend for FY17 will be at least 18.0p, a rise of 5.9% on FY16. Guidance has tended to be cautious, and it would be reasonable to assume a total dividend no lower than 18.5p based on those paid year-to-date, equating to a prospective yield of 2.3%.