Investment chief tips £1bn Edinburgh trust to thrive

Majedie Asset Management has been running the venerable trust, which counts Unilever, AstraZeneca, Royal Dutch Shell, Tesco, and Mondi as its top five holdings, since taking over the mandate from Invesco in March. It began its stewardship just as global stock markets collapsed with the outbreak of the pandemic, leaving it with the task of remoulding its holdings at the height of the crisis.

James de Uphaugh, who co-founded Majedie in 2002, described the market volatility as “almost [an] inter-generational peak”. Since then the trust’s managers have achieved some “gentle outperformance” versus its benchmark FTSE All-Share Index as the stock market has rallied. But Mr de Uphaugh said progress still has to be made to narrow the discount at which the share price currently trades to net asset value. Based on Thursday night’s closing price of 479p, the discount to net asset value was 12.5%.

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Mr de Uphaugh said: “An active fund manager tends to like volatility, and we embrace that. We have the advantage of a team that has worked together for a good number of years, and we have a lot of deep fundamental research that allows us to exploit opportunities that volatility throws up. That is what we look to do, day in, day out.”

Mr de Uphaugh highlighted the trust’s investments in mining equipment specialist Weir Group and homeware retailer Dunelm among holdings that could serve it well as the economy recovers. Weir and Dunelm each account for 2.4% of the portfolio, with each investment valued at £24 million.

Mr de Uphaugh, who noted Majedie looks at the role companies play in society and their commitment to ESG (environmental, social and corporate governance) when making investment choices, said: “Weir has some incredible products in terms of reducing water and energy usage in what are very extreme circumstances, because what you are really doing is crushing massive amounts of ore to get a very small amount of product, be it gold or copper.

“They have some fantastic technology which they are selling through local service centres, and doing it really well.”

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Noting that Weir shares a similar philosophy to mining company Anglo American, which accounts for 3.6% of the trust’s portfolio, Mr de Uphaugh said: “What you see throughout that is a desire to satisfy the local communities, [which is] crucial obviously at the moment with signs of great stress with Covid, reducing water usage and reducing energy usage.”

The trust’s investment in Royal Dutch Shell accounts for 4.5% of its portfolio. Asked if he believes oil and gas giants Shell and BP are committed to playing their part in the transition to a lower-carbon economy, Mr de Uphaugh said: “Both Shell and BP are moving to change their portfolios to energy sources of a lower-carbon intensity, and gradually investing more capex in renewables. So, they are pivoting their business at a measured pace, in a responsible way towards lower carbon forms of energy.

“But the reality is they need to do it in a measured way… in part because economic growth still needs quite a lot of energy.”

Elsewhere, Mr de Uphaugh is encouraged by the performance of Dunelm, which he said has benefited from the boost to the home improvements market the coronavirus lockdown has spawned. The company relaunched its website at the end of last year, which Mr de Uphaugh said has allowed it to “massively increase the capacity of its in-store network”. Dunelm has also been well positioned to take advantage of the huge shift to home working. Mr de Uphaugh said: “All of us are spending a bit more money on the house, because we have to make them multi-functional, and we also value it more, because we are spending more [of our time there]. Dunelm is in a perfect position to lap that extra demand up and it does it through clever use of technology.”