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AVI Global Trust: a unique approach to unconstrained investment selection

AVI Global Trust (LON:AGT) is a global investment fund that seeks long-term capital growth by investing in listed equities across the world. The AVI Global Trust has a unique approach to portfolio management with an unconstrained investment strategy that focuses on undervalued listed entities such as family controlled holding companies, other closed-end funds and a range of special situations.

Buying at a Discount

The companies that AVI Global Trust (AGT) invests in are typically listed and own a series of other companies as well. The fund looks for firms that are “under-researched, over-looked and inefficiently priced”, said CEO & CIO of AGT, Joe Bauernfreund at the March UK Investor Magazine conference. “Our job is to measure the true value of assets,” Bauernfreund added.

AVI Global Trust has been able to secure a significant discount to NAV as a result of the sell-off that occurred during the coronavirus pandemic. The fund’s weighted average portfolio discount reached 46%, exceeding both the financial crisis and the eurozone crisis. “Changes in the portfolio discount do provide tailwinds and headwinds to our performance. At times when discounts are widening, that is a headwind,” said Joe Bauernfreund.

AVI Global Trust Performance

This played out over the past year as the global economy experienced a significant period of stress. As fear gripped markets, discounts widened materially. This allowed AGT to outperform its benchmark, the MSCI AWI Index Ex US, in the second half of 2020, and into 2021, as discounts have begun to narrow.

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The fund has a market capitalisation of £988m with net assets of £1,070m, while its ongoing charge is 0.89%. AGT paid a total dividend of 16.5p for the past two years, which it has maintained or increased every year going back to 1985. The company remains committed to maintaining or increasing its total annual dividend each year, and has used revenue and capital reserves in the past to do so.

AVI Global Trust Portfolio

“It is helpful to think about AVI Global Trust in terms of themes,” said Bauernfreund. The themes AGT is focusing on at present can be broken down into four separate themes: digitally-enabled growth, quality category leaders, Japanese corporate governance and cyclical recovery. “We believe the companies we own in each of these themes are well positioned to deliver strong NAV growth over the coming years,” Bauernfreund added.

AVI Global Trust has a diverse geographic portfolio evenly spread between Europe, Japan, Asia and North America. Its exposure to different sectors is also diversified, while AGT adapts to specific sectors as opportunities arise. Currently consumer discretionary is its most weighted sector, followed by communication services and financials.

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