JohnBaronPortfolios.co.uk

Welcome to The Two Johns, the investment trust podcast brought to you by the website. Each month, John Baron joins former Investors' Chronicle editor John Hughman to discuss the big themes dominating the investment landscape and the important issues affecting the sector, while explaining how these are influencing the way the website's ten live investment trust portfolios are being managed.In this episode's three sections, they take a look at the factors which are likely to keep inflation higher and more volatile than previously expected, not least ongoing geopolitical tension; how the ability to borrow is another structural advantage enjoyed by investment companies over their open-ended counterparts, and how recent increases in gearing point to renewed optimism among managers;and how a continued narrowing of investment trust discounts to NAV from unusually elevated levels offers opportunity for value-conscious investors. 

IEM is a specialist investment company that provides investors with exposure to businesses delivering solutions to global environmental challenges, in particular those that enable the more sustainable use of resources including energy and water. Unlike trusts heavily invested in renewable infrastructure, IEM invests directly in equities around the world to tap into long-term structural growth trends driven by the global transition toward a more sustainable and resource-efficient economy.In the first of two interviews with the team behind the company, we speak to chairman Glen Suarez, a former investment banker who’s turned his attention to the investment company sector, and past chairman of trusts including Edinburgh Investment Trust (EDIN), Blackrock Throgmorton (THRG), and Bluefield Solar Income (BSIF). We discuss the important but often understated role of investment company boards in driving shareholder returns, the relationship between boards and the investment managers, and – in context of the recent actions of Saba Capital – the importance of dialogue with shareholders, and particularly retail shareholders.

SOI is a UK-listed investment company which aims to deliver income and capital growth through investments in dividend-paying companies across the Asia Pacific region, excluding Japan. Lead manager Richard Sennitt, who has over 30 years of experience in Asian markets, has managed the trust since 2020. The fund adopts a bottom-up, fundamentally driven approach supported by a large team of analysts based throughout Asia. In this podcast, Richard explains the strategy, highlighting its emphasis on strong, sustainable dividends over mere high yields; he discusses the company’s regional and sector allocation, and the rationale for portfolio weightings towards Taiwan, Hong Kong, Singapore, and Australia, and away from India and China. He outlines the methodology behind its rigorous bottom-up stock selection, and how the company is responding to geopolitical developments that are affecting Asia. He also discusses a positive shift in dividend culture across Asia, particularly in markets like Korea and Taiwan, and emphasizes the growing opportunity for income investors in the region.

NCYF is a closed-ended investment company focused on generating a high level of income, primarily through a diversified portfolio of high-yielding fixed income securities. Managed by Ian ‘Franco’ Francis of CQS, the fund targets opportunities in sub-investment grade credit, with a strong emphasis on capital preservation and careful risk management. With nearly 19 years of consistent performance under Franco’s leadership, NCYF maintains a UK-centric portfolio while retaining the flexibility to invest globally.In this episode, Franco joins John Hughman to discuss the current investment landscape and how NCYF is positioned to navigate it. Topics include the impact of market volatility, interest rate cycles, and inflation, as well as sector-specific opportunities in financials, travel, and renewables. Franco also explains the fund’s disciplined approach to bond selection, the role of equities, and how NCYF fits within a balanced portfolio - offering income, resilience, and potential for capital growth.

Welcome to The Two Johns, the investment trust podcast brought to you by the website www.johnbaronportfolios.co.uk. Each month, John Baron joins former Investors' Chronicle editor John Hughman to discuss the big themes dominating the investment landscape and the important issues affecting the sector, while explaining how these are influencing the way the website's ten live investment trust portfolios are being managed.In this episode, John Baron and John Hughman take a look at three sectors where sentiment has displaced fundamentals, and how such special situations in biotech, fintech and specialist mining present an opportunity for investors willing to look past the pessimism. They discuss the special structural factors that have influenced the long-term outperformance of investment companies, before turning their attention to why investors should be wary of paying too much attention to short-term macroeconomics and geopolitics.

Montanaro Asset Management, founded in 1991 by anthropologist-turned-investor Charles Montanaro, has carved a distinctive niche in UK small-cap investment. With a team of 39, including 18 long-serving analysts and fund managers, the firm manages approximately £3 billion in assets. Montanaro’s unconventional background and early experiences in private equity shaped his vision of applying a private equity approach to publicly quoted UK small companies. MTU, launched in 1995, embodies this vision, offering clients access to under-researched, high-quality small-cap companies. Charles stresses the importance of investing in simple, understandable businesses led by trustworthy management, and he remains convinced of the sector’s long-term outperformance, despite recent headwinds.In this exclusive podcast appearance, Charles discusses the challenges UK small caps have faced, from macroeconomic shocks to capital outflows in favour of US mega-cap tech stocks, and why he believes the sector is poised for recovery. He highlights the inefficiencies and lack of research coverage in the small-cap space as opportunities for active managers and shares examples from MTU’s portfolio, including Big Yellow, Cranswick, and Chemring Group. He explains why he prefers boots-on-the-ground research and long-term holding strategies, underscoring his team’s discipline and deep sector expertise. He also critiques structural issues affecting UK equity markets, advocating for regulatory and pension reform to reinvigorate domestic investment, and why a background in anthropology has proved an invaluable tool in understanding the psychology behind small-cap investing.

CVCG is an investment company specialising in Europeancorporate debt, with a core focus on senior secured loans and sub-investment grade credit. Its primary objective is to generate a reliable income stream, but it also seeks capital growth by identifying undervalued credit opportunities - bonds and loans trading below par. The trust benefits from a dedicated team of analysts based in London and New York, allowing it to carry out deep credit work and selectively deploy capital where risk-adjusted returns are most attractive. By investing in floating rate debt, which benefits directly from rising base rates, CVCG has been well-positioned for the recent interest rate cycle, and its senior secured position offers a strong buffer in the event of defaults.In this podcast, portfolio manager Pieter Staelens outlines how CVCG has responded to the sharp rise in interest rates, why its focus on mature, cash-generative businesses - particularly in sectors like healthcare and business services - has helped avoid distress, and how geopolitical uncertainty is shaping credit opportunities. He explains how the trust adapts its 50/50 portfolio split between performing credit and opportunistic investments depending on market conditions, and why it continues to avoid volatile or opaque sectors like real estate, automotive, and emerging markets. With yields still in the high single to low double digits and a proven ability to generate top-up dividends, Staelens argues the trust remains well-placed to thrive even as rate cuts begin and economic visibility remains limited.

Welcome to The Two Johns, the investment trust podcast brought to you by the website www.johnbaronportfolios.co.uk. Each month, John Baron joins former Investors' Chronicle editor John Hughman to discuss the big themes dominating the investment landscape and the important issues affecting the sector, while explaining how these are influencing the way the website's ten live investment trust portfolios are being managed.In this episode, John Baron and John Hughman delve into the misunderstood world of private debt and why its balance of risk and reward offers an attractive alternative to public debt markets. They also examine the importance of keeping an eye on fees, and why investment trusts are an increasingly competitive choice against other collective vehicles. And they discuss how Trump’s tariff wars are yet another reason to think inflation is likely to remain higher for longer.

MRC has a long-standing reputation in the UK investment trust sector, having been established in 1884. Its core focus since 1994 has been on generating long-term capital growth and rising dividends from a 70-strong portfolio of UK-listed mid and small-cap companies. The company adopts a quality growth strategy, targeting high-return, competitively advantaged companies trading at attractive valuations. Despite macroeconomic headwinds, such as interest rate volatility and political uncertainty, MRC has delivered robust NAV returns, recently achieving a 14% gain in the financial year ending January 2025.In this podcast, manager Guy Anderson outlines how MRC has navigated tough market conditions through bottom-up stock selection focused on companies generating sold cash flows; why the trust is slightly overweight in UK domestic cyclicals, including housebuilders and retailers, which Anderson believes are undervalued due to a disconnect between public sentiment and economic reality, and why increased conviction in market opportunities means the company’s gearing remains at the higher end of its usual range, while continuing to help it consistently grow its dividend above inflation.

NAIT, now managed by Janus Henderson since August 2024, is designed to offer investors a disciplined portfolio that blends income and growth within the North American market. Led by Fran Radano, the trust differentiates itself by seeking high-quality, dividend-paying companies, rather than simply following high-growth trends like the Magnificent Seven. With a focus on sustainable earnings, capital discipline, and valuation awareness, the trust maintains a portfolio trading at a lower multiple than the S&P 500, with underlying dividend yields of 2–3.25% and annual dividend growth of around 7%. Following the move to Janus Henderson, the trust has rebalanced towards stronger earnings and dividend growth while retaining a healthy yield, making it suitable for investors seeking both resilience andlong-term compounding returns.In the interview, Fran discusses the trust’s selective investment strategy, which spans U.S. and Canadian markets and focuses on sectors like healthcare, technology, and consumer staples; why the company’s holdings such as Medtronic, Accenture, and Philip Morris exemplify the trust’s preference for stable, cash-generative businesses with solid management and capital allocation practices; how the team still embraces technological tailwinds like AI through companies benefiting from its adoption; and the importance of face-to-face meetings with management, robust internal research, and staying attuned to macroeconomic shifts - such as tariffs and interest rate changes - when navigating markets.