Monks laments 'bruising' underperformance period as managers reposition portfolio
Over the reported period, the managers invested in semiconductor related companies they consider to be the 'picks and shovels' of the sector.
In the six months to 31 October, the trust's net asset value total return fell by 3.3% compared to 2.1% for the FTSE World index in sterling, while its share price total return was down 7.3% as the discount widened from 8.7% to 11.6% during the period.
Detractors from performance included fellow Baillie Gifford investment trust Schiehallion as its discount widened, as well as spirits company Pernod Ricard and cosmetics giant Shiseido, which were both impacted by weaker demand in China.
Healthcare exposure also contributed to underperformance. However, the trust has benefited from the growth stocks November rally, and its NAV is up 9.3% compared to a 6.3% rise for the FTSE World index since 31 October.
Monks investment trust acknowledge 'mistakes' led to a 'disappointing outcome'
Monk's portfolio managers Spencer Adair and Malcolm MacColl said the investment performance of Monks' portfolio in the first half of its financial year had been «disappointing».
They said this continues a «run of poor relative returns» that began two years ago, which they said has erased the «superior returns» delivered for shareholders since the firm's global alpha team took over eight years ago.
«Rapidly rising inflation and the increases in interest rates that began in the first half of 2022 suppressed investors' appetite for growth assets and precipitated sharp share price falls of companies held in the Monks portfolio,» Adair and MacColl said.
«The portfolio was too concentrated in rapidly growing, earlier-stage companies that bore the brunt of share price declines.»
The managers said they had
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