The Monks Investment Trust deserves special attention

The global growth trust Monks Investment Trust is overshadowed by Scottish Mortgage, its stablemate

Kaylie Pferten, however, believes that its record deserves attention.

The 13 billion Baillie Gifford-managed stablemate Scottish Mortgage (LSE: SMT) looms large over the 2.7 billion Monks Investment Trust (LSE: MNKS). It has a solid track record, but it is less concentratedno holding accounts for more than 5% of total assets, and unquoted investments make up only 6% of the total. Therefore, it provides an intriguing, less hazardous substitute for SMT.

In fact, Monks' investment return over the past five years has been 26% compared to 11% for SMT, and over the past three years, it has been 47% compared to 51%. Monks has outperformed the majority of other global trusts over the past one and three years, but SMT has improved in the past year thanks to its increased exposure to private equity, returning 17 percent as opposed to 10 percent.

Monks bring about worldwide development.

"Growth doesn't have to come at the expense of resilience," says Helen Xiong, the deputy manager who will succeed Spencer Adair, who has been in charge for 26 years. Although the US market's multiple of earnings is high in comparison to its past, this does not imply that it is pricey. Although it is more concentrated than it has ever beenthe top ten SandPs companies account for 40% of the index's valuegiant corporations continue to expand at double-digit rates. The biggest businesses were mature and dealing with diminishing returns to scale twenty years ago. The "

The three segments of the portfolio are cyclical growth, stalwarts, and rapid growth. Execution is crucial for rapid-growth businesses because they are typically founder-led and entering new markets.

Consider the food delivery company DoorDash, which recently acquired Deliveroo to enter the UK. Prosus, the fifth-largest holding in the portfolio, owns its competitor JustEat, but the majority of Prosuss's value stems from its 23% ownership of Tencent, a major Chinese tech company.

Stalwart growth companies, like Disney and Mastercard, are long-standing, resilient companies that are self-funding and expanding at a rate of 10% to 15% annually. Companies with cyclical growth, on the other hand, have the potential to grow by double digits over time, though not consistently. Businesses should keep investing even when profits occasionally decline, as low-cost airline Ryanair did during the pandemic. According to Xiong, "its valuation premium hit a historic low of 10 percent recently despite growth expectations much better than the market."

Instead of focusing on macro-driven growth drivers, we search for internal ones. Monks, however, is ready to act opportunistically. We recently had the chance to purchase growth companies like MSCI, Games Workshop, and Keyence at favorable prices due to a significant surge in low-quality value companies. A "

The long-term focus of monks.

When it comes to mistakes, Xiong is refreshingly honest. She acknowledges, "We have been wrong on Novo Nordisk." "Our hypothesis that obesity would evolve from a lifestyle issue to a more intricate metabolic issue was correct, but our implementation was flawed. Uber has been described as "a great product but not a great business," but this could be about to change as "other robotaxi operators will want to use the simplicity of the Uber network."

Monks, like all Baillie Gifford funds, prioritizes long-term stock investments over market or economic forecasts. Only 20% of the portfolio is turned over each year. Eight percent of net assets are borrowed for investments, suggesting that there is little reason to be concerned about a "bubble" in AI or growth stocks.

Xiong says, "I don't think AI is a bubble." "It has the capacity to alter more of the world economy than the internet's mid-teens percent share. The largest companies are justifiably valued slightly higher than the market due to their quality and growth rate. The "

Monks continue to be a desirable option for people who desire global expansion but are apprehensive about SMT or have had sufficient exposure to it.