FAQs

The Trust can invest in multiple assets, but the Company regards it as a flexible equity strategy rather than a multi-asset strategy in the commonly understood sense of the term.

A multi-asset strategy tends to invest across a broad range of different assets classes on a “permanent” basis, whereas the investment strategy the Trust follows is more focused on public equity markets, but with the flexibility to invest in other asset classes when warranted.

The Company believes that broad equity market indices are likely to generate lower returns in the future than they have in recent decades.

This is because the “forces” that drove strong asset prices are evolving in ways that turn tailwinds into headwinds across many areas, for example demographics.

Whilst the Company is optimistic about the benefits artificial intelligence will bring to economic productivity these benefits must be weighed against the headwinds.

However, the diversify of public equity markets means that even when broad market/index returns are weak, there are usually still plenty of attractive investment opportunities.

The key is to focus on those opportunities rather than regard the composition of broad equity market indices as a “benchmark” that drives portfolio construction.

The Company believes it is impossible to have a view on a company without reflecting on the broad environment for that company, including macroeconomic considerations.

Nevertheless, the investment strategy adopted by the Trust is not “macro”. Macro considerations impact on the Company’s views on the upside/downside risk and opportunity for individual stocks, and on the appropriate level of overall market risk for the strategy. However, “top-down” macro does not drive the strategy.

The key engine for investment returns over the long term is “bottom-up” stock selection, identifying key themes and structuring a portfolio that can generate attractive real returns through multiple different investment scenarios.

Stock picking is the key engine for generating returns. However, the Company rejects the notion that any investment is either “top down” or “bottom up” because all investment ideas are a blend of the two.

It simply isn’t possible in the opinion of the Company to have a view on an individual stock without thinking about the wider environment in which a business operates, including sensitivities to macro considerations.

The Company considers themes in a way that is a little different from some other investors. In the Company’s view, a theme is a collective term for a group of stocks that have some common features.

A thematic perspective on portfolios can be very useful for understanding risk and how different stocks are likely to behave in different scenarios.

This is important to the portfolio construction process adopted by the Trust. The portfolio is built without reference to any market index, and themes provide structure to the way in which the portfolio is constructed.

The key driver of theme identification is the stock selection process. The investment process focuses on identifying companies offering compelling long-term absolute upside, and this is usually a function of “change”.

Positive change within companies is usually associated with wider change in their industry, country or type of company.

The Company focuses substantially on understanding the interaction of change within and external to individual companies.

The best ideas tend naturally to “cluster” into themes. Developing a deeper understanding of those themes can be very helpful for building conviction in individual companies, and vice versa.

The Company believes that risk is the failure to generate real returns (net of inflation) over the long term. Failure to do so would mean the real purchasing power of money invested in the Trust declined over time.

The Company does not believe that short-term volatility of returns is an appropriate measure of risk because sometimes it is necessary to tolerate heightened volatility in returns in pursuit of longer-term real returns.

However, at other times, when broad market valuations are high and it is harder to identify opportunities expected to generate high absolute returns over the medium term, the Company believes it is appropriate to focus more on absolute downside risk.

The approach adopted is long term in nature, and setting the target market risk for the strategy is an explicit part of the investment process adopted.

Under the leadership of the Chairman, the Board of Directors is collectively responsible for the long-term sustainable success of the Company, generating value for Shareholders and contributing to wider society. It establishes the purpose, values and strategic aims of the Company and satisfies itself that these and its culture are aligned. The Board ensures that the necessary resources are in place for the Company to meet its objectives and fulfil its obligations to shareholders within a framework of high standards of corporate governance and effective internal controls. The Directors are responsible for the determination of the Company’s investment policy and strategy and have the overall responsibility for the Company’s activities, including the review of investment activity and performance, and the control and supervision of the Executive Director. A copy of the Schedule of Matters Reserved to the Board is available under Shareholder Information - Key Documents & Risk Information.

The Board consists of one full time executive Director and three non-executive Directors. It seeks to ensure that it has an appropriate balance of skills and experience, and considers that, collectively, it has substantial recent and relevant experience of investment trusts and financial and public company management. The Chairman, Mr Dowds, is deemed by his fellow independent Board members to be independent and to have no conflicting relationships. He does not have any other significant commitments that would affect his Chairmanship of the Company and the time he can commit to the Company’s affairs.

The role and responsibilities of the Chairman are clearly defined and set out in writing, a copy of which is available under Shareholder Information - Key Documents & Risk Information.

The Directors of the Company meet formally at least four times per year. Meetings include updates and the review of reports from the investment manager.

The Board regularly reviews its composition and effectiveness. As part of its review, it considers succession planning; identification of the skills and experience required to meet future opportunities; the challenges facing the Company; and those individuals who might best provide them. The Board has agreed that while the benefits of diversity, including gender and ethnicity, will be taken into account for any new Director appointments, the priority would be
appointment on merit. Therefore, although the Board is mindful of the targets in the Listing Rules that the Company will be required to report against in future financial periods, no measurable targets in relation to Board diversity have been set.

The net asset value per share is shareholders’ funds expressed as an amount per individual share. Shareholders’ funds are the total value of a company’s assets, at current market value, having deducted all prior charges at their par value
(or at their market value).

The share price data shown is for each day’s closing price. The information is historic and differs from the current share price.

Although the Company has no official benchmark, performance is show against the FTSE All-World Index.

If the share price is lower than the NAV per share, the shares are said to be trading on a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, the shares are said to be trading on a premium.

No investment in the Company’s portfolio may exceed 15% of the Company’s total assets.

An alternative performance measure is a numerical measure of the Company's current, historical or future financial performance, financial position or cash flows, other than a financial measure defined or specified in the applicable financial framework

The capital return per share is the total capital gain or loss of a company divided by the weighted average number of shares in issue during the year, excluding own shares held in treasury.

Gearing is the process whereby changes in the total assets of a company have an exaggerated effect on the net assets of that company’s shares due to the presence of borrowings.

Individual Savings Accounts and Self-Invested Personal Pensions.

Leverage is defined in the AIFMD as any method by which an AIFM increases the exposure of an Alternative Investment Fund it manages, whether through borrowing of cash or securities, or leverage embedded in derivative positions or by any other means.

As recommended by the AIC in its guidance, ongoing charges are the company’s annualised revenue and capitalised expenses (excluding finance costs and certain non-recurring items) expressed as a percentage of the average monthly net assets of the company during the year.

The revenue return per share is the total revenue of the company, divided by the weighted average number of shares in issue during the year, excluding own shares held in treasury.

If the share price of an investment trust is lower than the NAV, the shares are said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV and is usually expressed as a percentage of the NAV. If the share price is higher than the NAV, the shares are said to be trading at a premium.

Total assets less current liabilities before deducting prior charges. Prior charges include all loans used for investment purposes.

The combined effect of any dividends paid, together with the rise or fall in the share price or NAV. Total return performance comparisons between investment trusts with different dividend policies. Any dividends (after tax) received by a shareholder are assumed to have been reinvested in either additional shares of the investment trust at the time the shares go ex-dividend (the share price total return) or in the assets of the investment trust at its net asset value per share (the net asset value total return). Total return per share statistics are calculated on the basis of the weighted average number of shares in issue, excluding shares held in treasury.

Shares previously issued by a company that have been bought back from shareholders to be held by a company for potential sale at a later date or cancellation.