Global Equity Investment Strategies Beyond the US

Author: Jean-Baptiste Andrieux

Overview

Brunner Investment Trust (BUT) has distinguished itself as one of the top performers in the AIC Global sector over a five-year period leading up to May 20, 2025. The trust’s ability to adapt to fast-changing market dynamics underscores its investment strategy, which is executed by a skilled management team comprising Julian Bishop, Christian Schneider, Simon Gergel, and James Ashworth. Their approach focuses on a bottom-up portfolio construction that judiciously balances quality, growth, and value factors—an aspect that notably differentiates BUT from many of its sector counterparts, which are often heavily weighted toward growth.

Portfolio Composition and Strategy

The management’s strategy is complemented by a thoroughly diversified portfolio that mitigates risks associated with market volatility. By adhering to a stringent bottom-up analysis, the team is adept at identifying investment opportunities that may offer superior returns, irrespective of prevailing market conditions. This methodical approach not only enhances resilience but also allows for stability in fluctuating environments.

Recent Performance and Share Issuance

Reflecting the efficacy of this strategy, BUT has been among the select investment trusts to issue shares since 2022, having initiated a share issuance program in November 2024. The trust has consistently traded at narrow discounts or even at premiums, highlighting investor confidence. As of the latest data, BUT is trading at a discount of approximately 3.5%, showcasing its relative stability within the AIC sector.

Recent Adjustments to Portfolio Holdings

Over the past year, the management team has prudently trimmed or divested from several defensive holdings that had achieved elevated valuations. Notably, GE Aerospace, an aircraft engine supplier added to the portfolio in early 2024, has become a key contributor to performance. The proceeds from these sales have been redirected toward purchasing value-oriented stocks, particularly outside the US. This move aligns with the management’s assessment that the valuation gap between US equities and their non-US counterparts has widened measurably, creating more attractive future investment prospects.

Dividend Growth and Positioning

In 2024, BUT celebrated its 53rd consecutive year of annual dividend growth, solidifying its status among the AIC’s ‘dividend heroes.’ The trust currently offers a yield of approximately 1.7% over the last twelve months. This consistent dividend growth is a vital aspect of the investment proposition, serving as a cushion against capital growth stagnation while also enhancing the total return received by investors over time.

Market Analysis and Future Outlook

This year, European and UK equities have outperformed their US counterparts, as uncertainties grow over the sustainability of US economic supremacy. Concerns are emerging around trade tensions, potential recession, and an expanding budget deficit in the US. Simultaneously, the significant valuation gap presents a compelling case for investment in non-US equities. Currently, around 47% of BUT’s portfolio is allocated to European and UK equities, compared to an average of about 26% in the AIC Global sector.

Analyst Perspective

Analysts posit that the diversified nature of BUT positions it well to navigate varied market environments, with its balanced factor approach resulting in a versatile and resilient portfolio. The strong stock selection, especially since the management team took the helm in 2022, has contributed significantly to overall returns. Stocks like GE Aerospace have enhanced performance during challenging trading conditions.

Risks and Considerations

• Bull Case:
  • Provides diversification beyond US equities amid uncertainty and valuation disparities
  • Consistent performance across diverse market conditions
  • 53-year track record of increasing annual dividends
• Bear Case:
  • May underperform global equity indices if US exceptionalism returns or if market conditions favor specific styles
  • The discount has historically been much wider, suggesting potential volatility
  • Modest gearing could amplify performance, both positively and negatively

Conclusion

In conclusion, Brunner Investment Trust stands out as a compelling option for investors seeking global equity exposure without significant reliance on US markets. Its prudent management strategies, combined with a strong dividend history, make it an attractive proposition amidst the backdrop of current market uncertainties. FOR more detailed research on Brunner, click here.

Disclosure: This article is a non-independent marketing communication commissioned by Brunner. It has not been prepared in accordance with legal requirements to promote the independence of investment research.

Source: diyinvestor