Brunner raises dividend for 44th consecutive year - annual report summary
Our annual report summary series delivers a condensed analysis of a selected investment trust's annual report, including details of the trust's aim, investment style, portfolio focuses, gearing policy, charges and performance.
BRUNNER INVESTMENT TRUST
The Brunner Investment Trust is managed by Allianz Global Investors (AGI). It claims to offer a 'one-stop shop' for investors by targeting long-term capital and income growth from a portfolio combining UK and overseas equities.
Its annual report for the year to 30 November 2015 shows shareholders' assets of £273 million.
Lucy Macdonald, AGI's chief investment officer, global equities, has managed Brunner since July 2010, with Jeremy Thomas responsible for the UK portfolio.
They look for attractively valued high-return businesses with secular growth opportunities largely independent of the macroeconomic environment.
At 30 November Brunner's portfolio comprised 88 companies, with the top 10 accounting for 20 per cent. The largest sectors were financials 25 per cent, industrials 19 per cent and health care 11 per cent.
The UK weighting was reduced from 47 per cent to 42 per cent during the year, as the managers sought to diversify sources of income. The US was raised to 32.5 per cent and continental Europe to 16 per cent.
Brunner is burdened with expensive gearing, including a £28 million fixed rate interest loan and an £18.2 million stepped rate debenture with an effective interest rate of 11.27 per cent. The latter's repayment in January 2018 should boost Brunner's revenue.
Net asset value per share total returns last year were 1.7 per cent, almost matching the 1.8 per cent return on Brunner's benchmark, which is 50 per cent FTSE All-Share index and 50 per cent FTSE World (ex UK) index (£). Share price total returns were 2.7 per cent.
The total dividend, which is paid quarterly, was raised for the 44th consecutive year, this time by 2 per cent.
It was only 92 per cent covered, but with revenue reserves equal to 1.5 times last year's payout the board hopes to continue raising dividends in real terms. Ongoing charges were 0.75 per cent.
The Brunner family and connected parties hold 22 per cent of the ordinary shares. As this reduces liquidity, the board is reluctant to buy back shares to control the discount.
See the full annual report on the Allianz website.