Investment Strategies
UK Investment Trust Outlines Top Stock Picks
As investors face volatile markets and a year of elections, Julian Bishop, co-lead portfolio manager of the Brunner Investment Trust, and James Ashworth, senior portfolio manager, discuss the global equity market outlook and top stock picks.
Julian Bishop, co-lead portfolio manager of the UK-listed Brunner Investment Trust, and James Ashworth, senior portfolio manager, discussed investment opportunities in the tech industry at a media event in London this week.
The Brunner Investment Trust, a global equity investment trust, is heavily focused on tech and industrials, with 30 per cent of its investments allocated to UK equities and 70 per cent globally.
Despite the recent setback suffered by the US tech industry, Bishop and Ashworth remain positive about the outlook. Their top holding is Microsoft, the US tech multinational headquartered in Washington, best-known for its software products, which has few competitors for its key products (Office, Windows). It is also known for its Azure cloud computing platform and has an exclusive relationship with OpenAI, now integrating technology into Office (Copilot).
With revenue 15 per cent up in the fourth quarter of its 2024 fiscal financial results, compared with the previous fiscal year, Bishop emphasised that resilience is important. He would be surprised if the next generation and the generation after that are not using Microsoft.
With strong memory chip demand expected over the next few years, another top 10 holding is Taiwan Semiconductor Manufacturing Company (TSMC), a leader in memory chip manufacturing. They also invest in Dutch firm ASML in the semiconductor industry, providing chipmakers with what they need through lithography.
After years of underperformance, Ashworth is quite optimistic about the UK equity market, saying that firms are cheap and now could be a good starting point for investing in UK equities. They recently bought Auto Trader, a British automotive online marketplace and classified advertising business, listed on the London Stock Exchange. Bishop said that investing in UK equities acts as a good diversifier, notably in defensive stocks, as the US market is heavily skewed towards tech. Alec Cutler at Orbis Investments also sees attractive investment opportunities in UK firms, saying it is an undervalued market. See more commentary here.
Luxury goods
With demand for luxury goods under pressure amid a challenging
backdrop, and after above-trend demand post-Covid, Bishop said
the trust recently significantly reduced its exposure to
Paris-headquartered luxury goods brand LVMH Moet Hennessy Louis
Vuitton. He said that demand was high immediately after Covid,
when people were awash with cash and spending more. The firm’s
profits nearly tripled over the period 2021 to 2023 but the
situation has since changed considerably.
“Luxury goods firms are facing difficult times,” Bishop said. The only business whose sales are still rising is Paris-based Hermès International, a French luxury goods brand established in 1837, he said. Thomas McGarrity at RBC Wealth Management also highlighted how European luxury goods have been struggling recently, with Louis Vuitton-Moet-Hennessy (LVMH) delivering 1 per cent organic growth in the second quarter of 2024, down from 3 per cent in the first quarter. See more commentary here.