Real dividend heroes and growth giants

In our second presentation, co-manager Samantha Fitzpatrick discussed howMurray International (MYI) aims to generate an attractive yield and capital growth from a diverse range of companies from the vast pool of global equities. Naturally, this led to a review of the different regions the trust invests in, what the current allocations are and how each has contributed to performance in the first three quarters of the year, including a surprising tilt toward Asia for the dividend growth opportunities. This approach has supported twenty years’ worth of consecutive dividend growth.

Emily Fletcher, co-manager of BlackRock Frontiers (BRFI), discussed what makes the trust’s universe unique. She covered the trust’s move into the smaller countries in its universe, and the boost to returns this has brought. We hear some details on the outlook for the key countries which are represented in the portfolio, and the value that is present across the investment universe despite strong returns in recent years.

In manager Tom Moore’s presentation, he discussed how his approach for Aberdeen Equity Income (AEI) has resulted in strong NAV total returns over the past year, as well as how this supports the trust’s high yield, currently in excess of 6%. To achieve this, Tom discussed how he puts income at the centre of his process, looking for differentiated stock opportunities that can generate attractive yields without compromising on growth potential. He used examples of firms that the market had written off as value traps, but have managed to maintain their dividends through good earnings performance, leading to a re-rating and yield compression.

Tom Holl and Mark Hume, managers of BlackRock Energy & Resources Income (BERI) explained how they allocate between mining, traditional energy and energy transition themes. We heard a lot about the opportunities – and the threats – of the artificial intelligence boom and the opportunities in gold.

Julian Bishop, co-manager of Brunner Investment Trust (BUT), highlighted how cheap value, income and quality factors have become in the recent AI-fuelled growth rally. BUT has exposure to the AI trend via companies the managers think are reasonably valued growth prospects, like TSMC and Microsoft, but also a diverse set of growth opportunities playing other trends, a strategy which could come into its own now that more attention is being paid to the risks in expensive AI stocks like Palantir.

China has quickly shifted from being deemed uninvestable to becoming one of the strongest-performing markets over the last 12 months, helped by meaningful changes in policy direction, economic support and investor sentiment. Two of last year’s three major concerns – domestic weakness and regulatory pressure – have eased: Xi has taken a more pragmatic approach, delivering targeted support to areas critical for long-term growth such as innovation, consumption and private enterprise, whilst regulation has shifted to actively support the private sector and technological advancement. Geopolitical tensions with the US persist, but China has spent a decade building resilience through deeper supply chains across Asia, Latin America and Africa, and exports to the US now make up less than 3% of GDP. The country is firmly transitioning from factory of the world to innovation hub, with the private sector contributing 60% of GDP, 70% of technological innovation and 80% of jobs. Against this backdrop, Baillie Gifford China Growth (BGCG) is well-positioned, anchored in domestic innovators aligned with rising consumption, supportive policy priorities and China’s push for technological self-reliance, which has helped drive strong performance this year.

On the final day of our webinar series, Denis Jackson and Laura Foll provided an update on Law Debenture (LWDB), highlighting its differentiated structure and advantages in today’s UK market. The IPS business, which accounts for c. 18% of NAV but has funded over a third of the dividend over the decade, provides stable, recurring income and frees the equity portfolio from chasing unsustainable yields. This allows Laura and James to focus on quality and value across a broader opportunity set, rather than being confined to the traditional equity income universe. They see attractive opportunities in areas such as UK industrials and housebuilders, where valuations remain below historic norms. Despite its strong long-term performance and dividend growth record, LWDB now trades at a c. 4% discount, having been at a premium for much of the last five-years, offering investors a potentially attractive entry point to a differentiated play on the UK.