Holly Black: Welcome to Morningstar's 3 Stock Picks. I'm Holly Black. With me is Vincent Ropers. He is Manager of the Wise Multi-Asset Growth Fund. Hello.
Vincent Ropers: Good morning, Holly.
Black: So, you don't have three stocks for us today because you invest in other funds and investment trusts. So, we'll have three trusts instead. Where should we start?
Ropers: Let's start with AVI Global Trust, which is our largest position in our growth portfolio. This is a global equity trust that focuses on companies that are trading at significant discounts to their net asset value. They are doing that not by being like a lot of traditional value managers looking at a very broad investable universe, they focus on quite niche area – niche areas, they look at holding companies and investment trusts. And within those they are looking for catalysts for the discounts to narrow, so they tend to engage quite actively with the boards of those holding companies or investment trust to try and unlock shareholder value for minority shareholders.
Black: Okay, and what is trust number two?
Ropers: Trust number two is Oakley Investment Trust, a private equity trust of about 700 million market cap. We started investing in that trust at the beginning of 2020. And what attracted us to that trust initially is the very strong quality of the management, the strong quality of the portfolio. There again, it is a relatively concentrated portfolio that focuses on niche areas. So, they focus on technology, on education and on consumer sectors, and only those three sectors. A year ago, it was about a 30% discount, it has narrowed. Since then it is currently trading at about 10% discount, but we think there is more to come because the management of that trust is clearly focusing on getting the story out there, making the trust more transparent, being more shareholder friendly. And we think we are in the early stages of that story coming through to the market.
Black: Okay, and what's our final trust today?
Ropers: The final trust is Odyssean Investment Trust, another one of our large allocations in our growth funds. That trust is probably a mixture of the two trusts that we just talked about previously. So, it is a trust invested in U.K. small and mid-cap listed companies. But like AVI and like Oakley it tends to engage quite actively with the companies that it invests in and it is a very concentrated portfolio of less than 20 stocks. And really the key for that manager is to use a private equity approach to the listed market. So, they tend to take large positions, invest for the long-term and engage actively with the board of the management's that they invest in.
Black: And is this sort of active ownership engagement characteristic, a really important one for you. That does seem a common theme through these trusts?
Ropers: It is an important factor not so much because you might think it is because of an ESG bias that we may have. That's definitely something that we think about. But also, we think that increasingly for active managers, this is the way to unlock value and to really outperform indices by doing something that is relatively niche and where they've got an active say in how the value can be realized for shareholders.
Black: Vincent, thank you so much for your time. For Morningstar, I'm Holly Black.
