267694 EdinburghIT AR 2024 WEB - Flipbook - Page 11
THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 9
PORTFOLIO MANAGER’S REPORT
FOR THE YEAR ENDED 31 MARCH 2024
Dear Shareholders,
IMRAN SATTAR
PORTFOLIO MANAGER
EMILY BARNARD
DEPUTY PORTFOLIO
MANAGER
It is a great honour for us to take over as the
management team of your Company. We were
fortunate to work closely with the previous
management team, James de Uphaugh and
Chris Field, during the four years they managed
the Company and we observed first-hand
how they transformed the track record and
credibility of the Company. We look forward to
building on the strong foundations and excellent
investment track record that they put in place.
The Company’s key features and structure
mean it is an ideal vehicle for long-term savers
to capitalise on the excellent potential returns
to come from publicly-listed businesses both in
the UK and overseas.
As your Board emphasised when they
announced our appointment last autumn,
there is absolutely no change to the investment
process and team approach. We continue
to manage the Company’s portfolio with a
‘bottom-up’ stock selection process and an
emphasis on generating attractive total returns
– the same approach that has underpinned the
exceptional results of the last four years. The
key features of the portfolio remain:
•
40-50 holdings, typically drawn from the
lower reaches of the FTSE100, the higher
reaches of the FTSE250 and selected
overseas stocks;
As is clearly set out on the first page of this
document, your Company focuses on its home
market, the UK equity market, with at least
80% of the portfolio to be listed in London.
We start as your Portfolio Managers at a time
when UK equities are out of fashion, for a host
of well-rehearsed reasons, not least as their
returns have been lower than many other
markets (especially the US equity market) for a
long period of time. Quite what the catalyst for
an improvement in fortunes will be is hard to
say – there are no shortage of ideas, whether
from government or the private sector – but
strong businesses generating attractive
returns don’t go unnoticed for long, regardless
of where they are listed. We believe the UK
equity market offers a compelling universe of
businesses standing at attractive valuations.
•
Diversification by both
economic exposure; and
•
Enthusiasm for utilising the Company’s
attractively priced long-term debt facilities.
Further, some of the very best investment
opportunities arise when sentiment is poor. It
strikes us that we are in one of those times now.
We are very excited about the potential of the
portfolio we inherit, as well as the changes that
we have made to date, and look forward to
reporting to you over the years ahead how the
returns develop. We recognise the importance
of generating returns from an equity portfolio
that can measure up with the best. We think
this portfolio will be able to do just that.
company
and
We take a pragmatic approach to stock
selection, with a focus on exploiting market
anomalies that present across the growth-value
spectrum. Within this pragmatic approach, we
have a focus on identifying growing companies
with strong economic moats. Further detail
on the investment approach can be found in
the section titled ‘Portfolio Manager’s Core
Investment Beliefs’ on page 14.
The majority of the portfolio has remained
unchanged since we took over management
at the start of the calendar year. In the final
three months of the Company’s financial
year we made some modest changes to the
portfolio (detailed further below), reflecting
the investment opportunities that have arisen
and our own views on which stocks will drive
future returns. Some 16% of the portfolio has
been reorganised in the first three months of
the calendar year and we anticipate a similar
level of degree of change over the rest of
2024. The core of the portfolio, designed to
drive returns through a combination of capital
and income growth, remains the same.
