The Monks Investment Trust PLC (MNKS)
Legal Entity Identifier: 213800MRI1JTUKG5AF64
Results for the year to 30 April 2025
| NAV (borrowings at fair value)* | +0.1% |
| NAV (borrowings at par)* | -0.4% |
| Share Price* | -1.5% |
| Index† | +5.3% |
Source: LSEG / Baillie Gifford. All figures are total return*.
† Comparative index: FTSE World Index (in sterling terms).
Chairman’s Statement
Performance
Global equities performed well in 2024, driven by strong corporate earnings and the Artificial Intelligence spending boom. Indeed, as recently as February of this year, Monks’ NAV per share surpassed its previous high of £15, last reached in November 2021. However, a significant selloff occurred in April 2025, triggered by President Trump’s ‘Liberation Day’ announcement of U.S. tariffs and China’s retaliatory measures. Monks was heavily affected by the subsequent market sell-off, with the NAV and share price reaching their lows for the year in April 2025, shortly before the Company’s year-end.
During the year to 30 April 2025, the net asset value (‘NAV’) total return, with borrowings calculated at fair value, was +0.1% and the share price total return was -1.5%. Over the same period, the FTSE World Index return was +5.3%. This is clearly a disappointing result, and whilst the team are now in line with the index again this calendar year, a year-end-date is a year-end-date. It is particularly disappointing for me to report this underperformance, since I step down as Chairman of Monks at the forthcoming AGM.
Capital allocation and discount
The Company’s shares traded at a discount to net asset value throughout the year. The Board has been active in buying shares in the open market. Having issued shares when Monks’ shares traded at a premium to net asset value, we believe that it is our obligation to be ready buyers at a discount. Buying the Company’s own shares at a discount to NAV enhances NAV per share for ongoing shareholders. Buybacks also improve short-term liquidity in the Company’s shares. We believe that the underlying portfolio is attractive enough for our shares to trade at close to or above NAV.
Over the course of the Company’s financial year, we bought 26.5 million shares, at a cost of £321.1 million. Since we commenced this active programme in January 2022, we have bought back 65.5 million shares at a cost of £727.1 million; representing 27.7% of the Company’s issued share capital as at 31 December 2021, one of the largest buybacks in the global equity sector. At the year-end, the discount was 10.1% (30 April 2024 – 8.5%).
The Board will continue its buyback policy as a key part of its overall capital allocation; we have discussed increasing the intensity of the buyback so that the shares trade at a much narrower discount. Recent events have revealed a clearer investor preference for lower and less volatile discounts. That is what you should expect to see in future at Monks. We are reluctant to have a zero discount policy, effectively giving up the advantages of not being open-ended. However, the Board believes that shareholders should expect the Company to attempt to restrict any discount, to net asset value with borrowings calculated at fair value, to mid-single digits, in normal market conditions.
Borrowings and gearing
Our investment trust structure allows gearing, which should enhance long-term returns. The Board’s strategic borrowing target is 10%. It is expected that effective gearing will be maintained in the range of minus 15% to plus 15%. The Company has a mixture of long term, structural debt and shorter term, more flexible debt. The Company’s revolving credit facility of £150 million with National Australia Bank Limited expired at the end of November 2024 and has been replaced by a £100 million revolving credit facility with The Royal Bank of Scotland International; £50 million is drawn under this facility. At the period end, net gearing was 8.9% and the weighted average interest rate across all borrowings was approximately 3.6%. Our decision to issue structural debt at very low rates was the right one. With the benefit of hindsight, I wish we had issued more debt at such low rates.
Management expenses
Monks remains competitive on fees and expenses: keeping fees as low as possible maximises the long-term returns to shareholders. The total ongoing charges ratio for the year to 30 April 2025 was 0.43% down marginally from 0.44% in the prior year. The current tiered management fee scale ensures that all shareholders will benefit from economies of scale as assets grow, from markets and performance
Earnings and dividend
Monks invests with the aim of maximising capital growth rather than income. All costs are charged to the Revenue Account. The Board’s policy is to pay the minimum dividend required to maintain investment trust status. Retained earnings are reinvested in the portfolio. In order to build in headroom for further buybacks that would reduce the shares in issue qualifying for dividends, the Board is recommending that a single final dividend of 0.5p be paid, compared to 2.10p last year, to ensure that the amount retained for the year does not exceed that permissible. Subject to shareholder approval at the AGM, the dividend will be paid on 16 September 2025 to shareholders on the register at the close of business on 8 August 2025. The ex-dividend date will be 7 August 2025.
The Board
As previously communicated, I will retire from the Board at the conclusion of the Annual General Meeting. Randeep Grewal will succeed me as Chair of the Board, Nomination Committee and Management Engagement Committee.
The Board is cognisant of the need to ensure regular refreshment of its composition, whilst also maintaining continuity and corporate memory. In January, Dr Dina Chaya stood down from the Board as a consequence of time commitments arising from her executive role. The Board undertook a recruitment process in the first quarter of the year and David Ballance was appointed as a Director in March. We also announced that Richard Curling would join the Board in October 2025. David and Richard will both add investment trust experience and wide investment knowledge to the Board. I think they are excellent candidates, and I know they will work hard to pursue your interests.
Annual General Meeting
The AGM will be held on Tuesday 9 September 2025 at the Royal Institution, 21 Albemarle Street, London W1S 4BS, at 11.30 am. We look forward to welcoming shareholders there.
The Board intends to hold the AGM voting on a poll, so encourages all shareholders to exercise their votes at the AGM by completing and submitting a form of proxy. We recommend that shareholders monitor the Company’s website at monksinvestmenttrust.co.uk where any updates regarding the meeting will be posted. Market announcements will also be made in the event of any change to the scheduled arrangements.
Should shareholders have questions for the Board or the Managers, or any queries as to how to vote, they are welcome as always to submit them by email to enquiries@bailliegifford.com or call 0800 917 2113. For shareholders investing through a platform, the AIC guidance on how to vote shares in advance or obtain the documentation necessary to vote in person at the AGM, may be of assistance: theaic.co.uk/how-to-vote-your-shares.
Adoption of new Articles of Association
At the AGM, to protect the interests of all shareholders, we are seeking shareholder approval to adopt new Articles of Association (the ‘New Articles’) in order to update the Company’s current Articles of Association (the ‘Existing Articles’). The proposed amendments being introduced in the New Articles will provide that a majority of the board of directors of the Company (including the Chairman of the Board) must at all times be independent (as defined by the AIC Code of Corporate Governance) and that proceedings of the Board must be conducted with a majority of independent directors present.
A copy of the New Articles, which includes the full terms of the proposed amendments to the Existing Articles, will be available at the registered office of the Company at 3 St Helen’s Place, London, EC3A 6AB between the hours of 9.00 a.m. and 5.00 p.m. (Saturdays, Sundays and public holidays excepted) and on the Company’s website, monksinvestmenttrust.co.uk from the date the annual report is posted to shareholders until the close of the Annual General Meeting. The proposed New Articles will also be available for inspection at the venue of the Annual General Meeting from 15 minutes before and during the meeting and on the National Storage Mechanism located at https://data.fca.org.uk/#/nsm/nationalstoragemechanism, from the date of the annual report is posted to shareholders.
Outlook
Recent years have been difficult for active managers as stock market returns have been driven by a small number of companies, which have represented an increasingly large proportion of global stock market indices. Monks’ portfolio is intentionally diversified, with around 100 holdings. Whilst our managers have owned most of the companies that have driven stock market returns in recent years, these companies have represented a smaller proportion of Monks’ portfolio than their index weightings. This is now the longest sequential period in which the S&P500 has beaten its equally-weighted version. This has made the index difficult to beat. Nevertheless, our team has made mistakes, as every team makes mistakes. I have referred in the past to the importance of refocusing on valuations; and there have (inevitably) been stock-specific errors. The Board’s role is to be constructively critical, to probe more deeply when things are going well, and to be more supportive during more difficult periods.
At an AGM some years ago, a shareholder asked what the appropriate assessment period for a manager should be before reviewing them more formally. I responded that 5-year periods would be appropriate. The Board reassesses the Manager every year, in line with AIC guidelines. But the longer the period of assessment, the greater the information content. Given that we are behind the index over 5 years, you can expect the Board to be considering this issue in even greater detail. The longer period allows us to supplement the annual AIC checklist with consideration of the effect of personnel change, any process changes that have occurred during the period, and changing market dynamics.
We all share the view that there need to be a smaller number of very sizeable investment trusts in future, to reflect the changing shape of our ownership via wealth management platforms, advised, and self-administered. Monks needs to be fighting-fit as more mergers occur. I know that my colleagues will apply a great deal of effort to make sure that Monks should remain a core holding in the growth category and is in a position to be a consolidator.