In ‘normal’ times, the fact that The Bankers Investment Trust has existed since 1888 is an interesting titbit. In more volatile times though, our longevity gives us a certain perspective.

We are most definitely not in ‘normal’ times now. The path and impact of Trump’s tariffs in the coming weeks, months or years is frankly impossible for anyone to forecast. Regardless of whether the tariff pause remains in place, the unpredictability of President Trump’s America has been thrown into sharp relief. Can there be any permanency to tariffs when almost daily the rates are increased, reduced or suspended?

Let’s come back to that perspective. The Bankers Investment Trust has weathered two world wars, the great depression and Black Monday. In my own multi-decade career, I have invested through the dot-com bubble, the global financial crisis and, most recently, the Covid-19 pandemic.

The depth of that experience has informed a careful, considered approach to investing. It is important to not get caught in the short-term worries of commentators and focus on the medium-term outlook. We explicitly aim to provide a less volatile return profile than the wider market. There are two routes we take to try and achieve this.

First, we ‘follow the cash’. This means investing in businesses that have proved their ability to consistently generate cash over and above that required to fund the business. Having surplus cash means companies can invest in their own growth, reduce debt and pay dividends.

Dividends are our second tactic for reducing return volatility. We have paid our shareholders a rising dividend for 58 consecutive years. This income aims to help mitigate some of the volatility for our shareholders’ returns from share prices rising and falling.

Please find below some further thoughts from our regional portfolios on the current climate:

Jeremiah Buckley – US

“Periods of extreme volatility like we’ve been in the last couple weeks and the last month and a half really gives us as active managers a lot of opportunities to add value by actively managing positions as well as industry exposure.

The S&P telecom services is up 15% so far this year, whereas semiconductors are down nearly 30% so far this year. And so that’s a great example of the severe rotation that we’ve seen to defensives and away from growth cyclicals and secular growth companies. So, as active managers, we get really excited about the opportunity to take advantage of these rotations.”

Alex Crooke – Europe

“President Trump’s message that Europe needs to pay its way has finally woken up European politicians to take action and stimulate their economy. Germany is leading the way, removing blockages to increasing debt, investing in defence and infrastructure which we forecast will materially raise the growth potential. The proposed scale of spending is unprecedented in European history and will create opportunities to invest in a number of industries.

Deregulation provides the final opportunity for growth to be unleashed. Europe has, for too long, shackled companies trying to innovate and banks trying to lend. Winding back the red tape is potentially a game changer for growth.

Sat Duhra – Asia Ex. Japan

“This is a pivotal period where the recent outperformance of Asian equities against US equities could be the beginning of a reversal of an unjustifiably wide valuation differential. A differential which has recently been challenged by a genuine underlying recovery in China, albeit sentiment is being readjusted from very low levels.”

Junichi Inoue – Japan

“The big focus is on the implications for Japan’s exports where a myriad of factors means measuring the impact is challenging. Over the past 30 years, Japanese companies have localised their businesses in the US, while at the same time expanding them globally, with the aim of reducing dependence on trade with any single country.

Exports from Japan to the US constitute only around 20% of total exports, of which only circa 30% are automobiles. What is important is whether businesses have a competitive advantage and pricing power.”

Disclaimer

Past performance does not predict future returns.

There is no guarantee that past trends will continue, or forecasts will be realised.

Not for onward distribution. Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser. This is a marketing communication. Please refer to the AIFMD Disclosure document and Annual Report of the AIF before making any final investment decisions. Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment. We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.

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