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Look beyond the UK when it comes to income


The Bankers Investment Trust PLC

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Approaching a New Year investment crossroads

Reflecting on an eventful and challenging 2023, where will opportunities emerge for the Bankers Investment Trust?

It has been another challenging year for investors – with geopolitical shocks, sluggish economic growth and interest rates ratcheting up – but this period has also presented many opportunities, helping Bankers Investment Trust to raise its dividend for the 56th consecutive year and offer a share price total return of 5.9% over twelve months (to 02/01/2024).

It helps that the £1.5bn trust has a flexible structure designed to access growth and income from around the world with no limits on individual country or sector exposures. This global approach is evident in the six regional sub-portfolios that form the trust: UK, North America, Europe ex. UK, Japan, Pacific ex. Japan and China.

A dominant few

A key theme of 2023 has been the continued rise of the Magnificent Seven stocks, with these giants now dominating returns in both US and global indices due to their size. These tech names – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla – now represent nearly 30% of the S&P 500, the most-watched US equity index, and over 20% of global benchmarks. These companies have become such strong performers that even missing just one or two of them can cause an investor to underperform their benchmark.

Their sheer outperformance has thrown the challenges of other markets into even sharper relief. China has had a particularly challenging 2023, experiencing a sluggish recovery from Covid-19 lockdowns that were only fully lifted at the start of the year. Consumers have also been worried by the collapse of numerous property developers, as many Chinese hold much of their wealth in property.

During this period, we have seen value stocks – those that trade at lower valuations than they would be expected to relative to their earnings – perform reasonably well. However, the Magnificent Seven and other growth stocks – companies anticipated to grow their earnings faster than the rest of the market – have outshone them. This dynamic is highly unusual when interest rates are rising, although could be attributed to the AI trend.

Central banks continued to raise interest rates last year to combat inflation which, fortunately, has subsequently fallen rapidly. However, high rates are still suppressing demand and if they remain elevated then there could be more problems ahead.

The risks on our radar

High rates are just one of the challenges investors will have to consider in 2024. High borrowing costs can be recessionary, making setting rates a delicate balancing act for central banks. One key metric we will be watching is unemployment because if economic growth slows, companies are likely to start letting employees go, which could dampen consumer sentiment and further reduce demand.

Another big question surrounds valuations. Growth stocks have become more expensive in 2023 and companies need to meet the elevated profit expectations that these reflect in 2024. High starting valuations for equities require a healthy economic backdrop to deliver strong earnings growth, in historical periods where that has not transpired the most expensive stocks in the market have come under pressure.

Another thing to remember is that several significant elections are due in 2024, in the US and UK in particular. Perfectly forecasting election results is impossible, but we can’t avoid the fact that changes of government can lead to new economic policies that impact the portfolio. Therefore, there is much to monitor.

The opportunities of 2024

Against this backdrop, we are thinking intensely about where the best opportunities for the trust may appear next year. We see no reason why enthusiasm for AI will suddenly stop; however, it will take time to see if it really is a gamechanger for productivity.

The AI boom helped the Magnificent Seven flourish in 2023, but caution is advisable for the more consumer-focused stocks. Some of these companies have been raising profits only through cost-cutting – which is inevitably limited in scope – while sales are harder to grow. As such they may be vulnerable in an environment of slowing economic growth, especially if unemployment increases.

To this end, we are also cautious about financials. Given that inflation is falling, interest rates in turn could well begin to fall which would make it more difficult for these companies to grow profits.

On the other side of the ledger, Pharmaceutical companies are currently on relatively low valuations, following the pandemic-driven mania and subsequent sell off. Several areas are subject to exciting new research and promising innovation, with the sector a typically defensive place – with earnings holding up – in an economic slowdown. Global demographic trends are also supportive for this sector longer term.

With the benefit of our global mandate, we see opportunities in Asian equities. As mentioned, this area has lagged Western markets in 2023 but supportive policies from the Chinese government and falling interest rates in the US could boost the region. Lower relative valuations also present a potential buying opportunity. The specialist sleeve managers for Bankers in these regions can help identify the most attractive businesses, and help the trust deliver on its long-term objectives.


A standard (usually an index) that an investment portfolio’s performance can be measured against. For example, the performance of a UK equity fund may be benchmarked against the FTSE 100 Index, which represents the 100 largest companies listed on the London Stock Exchange.


A variable discretionary payment made by a company to its shareholders.

Growth investing

Growth investors search for companies they believe have strong growth potential. Their earnings are expected to grow at an above-average rate compared to the rest of the market, and therefore there is an expectation that their share prices will increase in value. See also value investing.


The rate at which the prices of goods and services are rising in an economy. The Consumer Price Index (CPI) and Retail Price Index (RPI) are two common measures. The opposite of deflation.

Valuation metrics

Metrics used to gauge a company’s performance, financial health and expectations for future earnings, eg. price to earnings (P/E) ratio and return on equity (ROE).

Value investing

Value investors search for companies that they believe are undervalued by the market, and therefore expect their share price to increase. One of the favoured techniques is to buy companies with low price to earnings (P/E) or price to book (P/B) ratios. See also growth investing.


References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.

Not for onward distribution. Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser. This is a marketing communication. Please refer to the AIFMD Disclosure document and Annual Report of the AIF before making any final investment decisions. Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment. We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.

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Important information

Please read the following important information regarding funds related to this article.

Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser. This is a marketing communication. Please refer to the AIFMD Disclosure document and Annual Report of the AIF before making any final investment decisions.
    Specific risks
  • Higher yielding bonds are issued by companies that may have greater difficulty in repaying their financial obligations. High yield bonds are not traded as frequently as government bonds and therefore may be more difficult to trade in distressed markets.
  • The portfolio allows the manager to use options for efficient portfolio management. Options can be volatile and may result in a capital loss.
  • Global portfolios may include some exposure to Emerging Markets, which tend to be less stable than more established markets. These markets can be affected by local political and economic conditions as well as variances in the reliability of trading systems, buying and selling practices and financial reporting standards.
  • Where the Company invests in assets that are denominated in currencies other than the base currency, the currency exchange rate movements may cause the value of investments to fall as well as rise.
  • This Company is suitable to be used as one component of several within a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested in this Company.
  • Active management techniques that have worked well in normal market conditions could prove ineffective or negative for performance at other times.
  • The Company could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Company.
  • Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
  • The return on your investment is directly related to the prevailing market price of the Company's shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the Company. As a result, losses (or gains) may be higher or lower than those of the Company's assets.
  • The Company may use gearing (borrowing to invest) as part of its investment strategy. If the Company utilises its ability to gear, the profits and losses incurred by the Company can be greater than those of a Company that does not use gearing.
  • If the Company seeks to minimise risks (such as exchange rate movements), the measures designed to do so may be ineffective, unavailable or negative for performance.
  • All or part of the Company's management fee is taken from its capital. While this allows more income to be paid, it may also restrict capital growth or even result in capital erosion over time.