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Momentum Multi-Asset Value Trust plc announces interim results

Momentum Multi-Asset Value Trust plc has announced their Interim Results. The highlights include:

  • Net asset value total return +2.1% vs Benchmark +6.2%
  • Share price total return +3.4%
  • Annualised volatility 9.9% vs 13.4% for the MSCI UK All Cap Index
  • Quarterly dividend maintained at 1.68p per share
  • Annualised yield of 3.6% based on the 188.5p period-end share price

 

Richard Ramsay, Chair Momentum Multi-Asset Value Trust (‘MAVT’) plc said: 

“After the wonderful and life-saving vaccine news, the practicalities of deployment and the realities of COVID-19’s evolution have caused some worries, including very recently with the appearance of the Omicron variant. Its severity is still under investigation making it currently difficult to assess the trajectory of the pandemic. As concerns have ebbed and flowed, so have stock markets too.

“Overall, the corporate sector has dealt with the re-opening of economies very well, but supply chain bottlenecks and labour shortages in some sectors continue to prove problematic. All of us are experiencing these in one way or another, and the result is that the cost of living is rising. We have enjoyed such a long period of very low inflation (or even deflation in many areas) that dealing with resurgent inflation is a challenge for many. How high inflation gets and for how long it lasts are crucial questions without definitive answers at this stage.

“The current issues of concern to investors are well known. Will COVID-19’s evolution cause economic recovery to stall or reverse, or will the virus be contained and managed by vaccines and improving therapies? Will inflation increase by more, and stay high for longer, than is manageable? History shows that equities generally do not perform particularly well when inflation rises. Not so much because of pressure on earnings but rather because multiples or valuations decline. But history also shows that Growth stocks are much more harshly treated than Value stocks in this kind of environment.

“Given the particularly elevated valuations currently ‘enjoyed’ by Growth stocks, the risk of reassessment by investors appears real. MAVT however seems well placed. The inherent value in MAVT’s UK equity investments has been evident with takeover approaches for a number of portfolio companies. Also, not only are MAVT’s direct and indirect equity investments of a Value style, but many of its Specialist Asset investments are in real assets with inflation-linked or protected revenue streams.

“There will inevitably be bumps along the road, but we believe the journey MAVT is on with the Refined Value style of the Manager is attractive.”

View from the Manager (Lucy Dolan and Gary Moglione, Momentum Global Investment Management Ltd)

“A significant driver of our UK Equities performance came from merger and acquisition activity. In recent months we have seen four approaches from private equity firms for companies in the portfolio. Furthermore, we noted several activist investors beginning to invest in some of the companies that we hold. This helped to generate significant increases in their share prices, demonstrating further validation of the potential returns available in the portfolio.

“Over the period, the largest detractor to performance was Purplebricks Group. However, the company’s management team recently implemented significant positive changes, including moving their self-employed staff to full employment contracts and amending their pricing structure. These changes have caused some short-term disruption which also coincided with a period of low demand following the UK Government’s withdrawal of stamp duty exemptions but we remain positive on the company’s prospects. Three UK Equities were in the top five contributors, namely Kier Group, which had a rights issue which helped improve the quality of its balance sheet, and Senior Engineering and Ultra Electronics, which both received takeover approaches from private equity firms.”

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