The Bankers Investment Trust (BNKR) aims to achieve capital growth in excess of a global developed markets index and dividend growth greater than UK CPI inflation over the long term. The trust invests in a geographically diversified portfolio of companies listed throughout the world.
The trust is managed by Alex Crooke and comprises four regional sub-portfolios: Pan Europe (including the UK), Pan Asia (including China), Japan and North America. Each of these sub-portfolios is run by an on-the-ground specialist with deep local insights.
BNKR’s assets under management were approximately £1.5bn at end 2024.
BNKR targets quality companies for a balanced, style neutral portfolio.
The trust’s manager targets what he refers to as good companies, defined as high-quality, mature, well-run, cash-generative businesses. Cash generation is especially important for Crooke, as he believes this gives businesses the means to invest in growth and to pay rising dividends. The trust adopts a balanced approach, with the ability to shift between growth- and value-oriented stocks. Crooke stresses that while he is not a value investor, he tries not to overpay for any company relative to its fundamentals.
The trust now has a concentrated portfolio of best ideas.
Following a strategic review in early 2024, the manager concentrated the portfolio, reducing the number of holdings from 170 to 100 – the intention being to capture the best ideas available across global markets. Smaller holdings, which contributed less to performance, have been eliminated to sharpen focus.
Three of the trust’s four sleeves now hold around 20 stocks. The North American portfolio has a slightly higher number of holdings than other regions due to the depth of opportunities there.
Crooke stresses that this change does not represent a new strategy but is instead a refocusing of the trust’s existing approach. His attention to valuations also remains unchanged.
A strong dividend track record.
BNKR boasts one of the longest track records of annual dividend growth among UK listed investment trusts. Its dividends have risen every year for 58 consecutive years. The dividend for the financial year ended 31 October 2024 rose to 2.688p per share, a rise of 5% on the previous year.
This increase is consistent with the trust’s objective of maintaining dividend growth above UK inflation over the long term. A dividend of this magnitude represents a prospective yield of 2.4% based on the share price at end December 2024.
Greater flexibility in the use of revenue reserves intended to lift relative performance.
While the trust’s dividend track record has been strong, a longstanding underweight to the US and a focus on valuations and income mean that the trust has not fully captured the rally in US tech stocks, as most of these companies do not pay dividends. This means relative performance has lagged in recent years.
The recent portfolio concentration has been accompanied by a modification to the use of the trust’s revenue reserves, which is intended to redress this underperformance.
In June 2024, the trust’s board indicated that it would adopt a more flexible approach to the use of its ample revenue reserves. Using reserves to supplement dividends if necessary enables the manager to invest in a broader pool of investments, including low- and zero-dividend-paying technology stocks and other growth names that deliver capital growth, while also offering the prospect of attractive future dividend payments. This greater flexibility provided the manager with the leeway to add a number of new positions in zero-yielding US tech companies, including Alphabet, Amazon and Meta.
The manager is optimistic that the recent asset reallocation, combined with the board’s more flexible attitude to the use of revenue reserves, means the portfolio is now well-placed to boost capital returns while continuing to deliver progressive dividend growth.
Published 6 February 2025.
