The Monks Investment Trust PLC A satisfactory return after a weak first half

Monks Investment Trust PLC

Monks Investment Trust PLC (LON: MNKS) has today provided unaudited preliminary results for the year to 30 April 2019.

Over the year to 30 April 2019, the Company’s net asset value (NAV) total return* was 12.0% compared to a total return of 11.7% for the FTSE World Index (in sterling terms). The share price total return for the same period was 12.7%.

  • Examples of strong performers included several well-known online technology companies. On average Facebook, Amazon, Netflix, Alphabet (Google), Baidu, Alibaba and Tencent (which we own through the South African media company, Naspers) grew revenues by 34%.
  • Portfolio turnover for the 12 months was 16% and the Company’s invested gearing stood at 6.4% at the financial year end.
  • A single final dividend of 1.85p is being recommended, compared to 1.40p last year. This is the minimum required to maintain the Company’s investment trust status, reflecting its priority which is capital growth.
  • Over the period, 1,450,000 shares were issued at a premium to NAV, being 0.7% of the Company’s share capital, raising £12m. The share price ended the year at a 4.0% premium to NAV*.
  • Ongoing charges for the year to 30 April 2019 were 0.50%, down from 0.52% in the prior year.
  • The managers continue to see a broad spread of new ideas coming forward, from a range of different industries and geographies, and remain optimistic for future portfolio returns.
  • Since the change in approach in March 2015 the NAV total return at fair value has been 76.8% and the share price total return 107.8% against the comparative index at 56.7%

* With borrowings deducted at fair value

# Total returns from 31 March 2015 to 30 April 2019.

Past performance is not a guide to future performance. Total return information is sourced from Baillie Gifford /Refinitiv. See disclaimer at the end of this announcement. For a definition of terms see Glossary of Terms and Alternative Performance Measures at the end of this announcement.

The Monks Investment Trust PLC invests globally in order to achieve capital growth. This takes priority over income and dividends. Monks is managed by Baillie Gifford, an independent fund management group, which has around £200 billion under management and advice as at 10 June 2019.

Monks is a listed UK company. The value of its shares and any income from them can fall as well as rise and investors may not get back the amount invested. The Company is listed on the London Stock Exchange and is not authorised or regulated by the Financial Conduct Authority. You can find up to date performance information about Monks at‡. Past performance is not a guide to future performance. See disclaimer at the end of this announcement.

‡ Neither the contents of the Managers’ website nor the contents of any website accessible from hyperlinks on the Managers’ website (or any other website) is incorporated into, or forms part of, this announcement.

Chairman’s Statement

In the year to 30 April 2019 Monks produced a satisfactory return after a weak first half and a second half recovery, with the net asset value (NAV) and share price reaching an all-time high shortly before the year end. This supported the Board’s view that short-term volatility, while inevitable, is of little relevance to long-term returns.

The managers continue to build a strong track record, based on a consistent investment approach and a clear exposition of their investment beliefs. This approach is founded on long-term perspectives which result in low stock turnover and a differentiated actively managed portfolio, with exposure to a range of companies with above average growth. The Managers’ Report highlights that fundamental revenue and profit growth by the underlying holdings has again been the main determinant of returns.

The consistency of investment approach combined with an increase in marketing efforts has contributed to a material change in the Monks share register over recent years. Intermediaries such as discretionary wealth managers and individuals have increased their combined shareholding from 61.7% in April 2015 to 83% currently. This is gratifying, as the Board believes that Monks represents a sound long-term savings vehicle for such investors, who benefit from high quality professional portfolio management together with independent board oversight at a competitive cost.


The Board believes that performance should only be assessed over longer term periods, ideally of five years or more but is encouraged to note that in the year to 30 April 2019 the NAV total return, with borrowings calculated at fair value, was 12.0% and the share price total return was 12.7%, while the FTSE World Index returned 11.7%. Since the change in investment approach implemented in March 2015 the NAV total return at fair value has been 76.8% against the comparative index at 56.7%*. Over the same period the share price total return was 107.8%, benefiting from the closing of the discount to NAV at which the shares had previously traded.

Share Issuance

Share issuance is only undertaken at a premium to the NAV so as to benefit existing investors. As a result of our shares consistently trading close to NAV during the year the Company was able to issue 1,450,000 new shares at a premium to NAV, being 0.7% of Monks share capital and raising £12m of new funds for investment. The premium to NAV with borrowings calculated at fair value stood at 4.0% at 30 April 2019, up from 3.4% at the start of the year.

Borrowings and Gearing

Among the advantages of investment trusts over other forms of collective investment is the ability to invest borrowed funds to enhance shareholder returns over the long term. At the financial year end, the invested gearing was 6.4% which remains below the 10% level that the Board and managers believe should be the long-term neutral position. The managers stand ready to take advantage of attractive investment opportunities with flexible short-term bank facilities in place.

Management Expenses

Monks aims to be competitive on fees and expenses, which helps to enhance returns to shareholders. Having agreed two reductions in the management fee in recent years the total ongoing charges ratio for the year to 30 April 2019 was 0.50%, down from 0.52% in the prior year and 0.58% at April 2015. The current tiered management fee scale (see note 3 below) should ensure that shareholders will benefit from economies of scale should Monks continue to grow.

Unquoted Investments

The managers believe that a growing part of Monks investment opportunities consist of companies which are not yet listed and that investment in such private companies has the potential to enhance future returns, especially as more successful growth companies are remaining private for longer. The Board has increased the limit on private company exposure to 5% of the portfolio (from 2%) and has approved an investment of 2% of assets in The Schiehallion Fund, a listed Baillie Gifford managed vehicle dedicated to investing in late-stage high-growth private businesses. This will give Monks exposure to a wider range of investment opportunities in such businesses than would otherwise be the case. Schiehallion will not charge any fee on uninvested funds and the value of our investment will be excluded from calculation of Monks own fee.

Earnings and Dividend

Monks invests with the aim of maximising capital growth rather than income and all costs are charged to the Revenue Account. The Board is recommending that a single final dividend of 1.85p should be paid, compared to 1.40p last year. This is the minimum required to maintain investment trust status. Retained earnings are reinvested in the portfolio to benefit future capital returns.

The Board

Douglas McDougall is retiring from the Board at the AGM. He has been a Director since 1999 and was the manager of Monks from 1984 to 1999. In both capacities he has made a major contribution to the development and success of Monks. We are very grateful to him for many years of wise investment advice. It is our intention to recruit a new Director in the near future.


Recent years have been characterised by a plethora of economic anxieties, especially relating to the possible impact of rising interest rates on asset prices around the world. A decade on from the depths of the financial crisis, these rates remain close to trough levels and inflation is subdued, reflecting weak economic momentum. Yet at the same time the growth opportunity for many companies is expanding dramatically, as new technologies totally transform the way that business is conducted. This is creating new corporate champions across a widening swathe of markets and industries, at a pace and to a scale which may be unprecedented. Monks is well placed to benefit from such opportunities whilst also holding a balanced and diversified portfolio of growth stocks which should prosper, whatever the prevailing macro-economic backdrop.

Annual General Meeting

I would encourage shareholders to attend the Annual General Meeting, which will be held on 3 September 2019 at 11.00am at the Institute of Directors. Our managers will give a presentation and there will be an opportunity to ask questions and to meet them and the Directors informally.

James Ferguson


11 June 2019

  • Total returns from 31 March 2015 to 30 April 2019.

Past performance is not a guide to future performance.

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