The Bankers Investment Trust – A global but local approach to investing
The pandemic exposed supply chain vulnerabilities and the need for businesses to be more resilient, leading to a reassessment of strategies, supply chains and investment. As such, knowledge of local markets is now more important than ever to assess how these factors impact the investment landscape. Here, we look at how the Bankers Investment Trust is utilising its regional managers to uncover opportunities.
5 minute read
With most developed market economies having returned to relative normality over the past two years, there’s arguably been daylight between the nadir of the lockdowns and the present day to shuffle the pandemic into the ‘bad dream’ category of our collective consciousness.
Did that really happen?
Such is our collective recency bias that while shopping in the reanimated Oxford Street or jockeying for seats on the 5pm Piccadilly line, the pandemic gradually becomes an ever more distant memory. However, one only has to scratch the surface of our economy to feel the continued reverberations of those fateful years.
The global pandemic disrupted the movement of people, goods, and capital, and highlighted the vulnerabilities of globalization. The rise of nationalism and protectionism in some parts of the world has led to trade tensions and disputes, further disrupting global supply chains and investment flows. Put simply, we are investing in a new climate, one with a revised set of rules and priorities. One where knowledge of local markets and dynamics is now more important than ever.
While existing in a globalisation-oriented world for much of its lifespan, The Bankers Investment Trust, managed by Portfolio Manager, Alex Crooke has always recognised the value of investing globally through a local lens. Since 1888, the Company has sought to provide investors with income and capital growth from a globally diversified portfolio.
A local but global approach to investing
The Trust invests across six regions – North America, Europe, Japan, China, the Asia Pacific Region, and the UK. However, far from simply employing top-down analysis from afar, each region is managed by a regional specialist with comprehensive knowledge of their local market. This is particularly important during periods of uncertainty because it helps the managers to accurately assess how changes in local consumer preferences, regulations and infrastructure impact the investment landscape.
Having a global but local approach to investing also allows us to take advantage of the different regional dynamics at play. With Western economies stuck in the quagmire of stickier inflation and slowing economic growth, we’ve been looking to the East for opportunities. Generally, Asian economies are not suffering from the malaise of higher inflation, and as a result, interest rates have not risen as high. This combination means that consumers are not under the same cost pressures compared to those in the West. In addition, China’s reopening and growth has also been a strong tailwind to the region’s growth prospects.
As such, we have been investing in companies within areas such as travel and leisure, food and beverages and consumer goods, as they should benefit from increased domestic spending. Having local knowledge is crucial to this process because it enables us to sift through the noise to find high quality businesses that are providing their customers with high quality services or goods. This is just one example of how we blend our global outlook with local, bottom-up analysis. It is an approach vindicated by the Trust’s performance.
Walking the walk
Our consistency in approach has yielded some impressive results; the Trust has increased its dividend every year over the last 56-years. This record is the longest of any investment trust and is the reason why BNKR sits atop the Association of Investment Company’s (AIC) Divided Heroes list. Capital growth has also been solid, with the Trust outperforming its benchmark over the longer term. In addition, the Trust’s ongoing charge is amongst the lowest in its sector.
BNKR offers investors a globally sustainable, diversified, and actively managed investment solution with a local focus. This makes it an attractive opportunity for investors that are keen on the prospects of the global economy but desire a more holistic approach to regional investing.
The post-pandemic world is indeed a ‘new normal’ and to fully appreciate the investment opportunities it presents, there is ample rationale to think globally but invest locally.
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Diversification – A way of spreading risk by mixing different types of assets/asset classes in a portfolio. It is based on the assumption that the prices of the different assets will behave differently in a given scenario. Assets with low correlation should provide the most diversification.
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