The £1.2 billion AVI Global Trust (LSE: AGT) is part of the “Global” investment trust sector, but in practice sits in its own niche. It focuses on finding “companies whose share prices stand at a discount to estimated underlying net asset value” and runs a fairly concentrated portfolio. At the end of September, the top-ten holdings accounted for 50.6% of assets, with 45 holdings overall.
MoneyWeek added AVI Global Trust to its investment trust portfolio in 2023. We liked AGT for its global value mandate in a frothy market. That said, this approach has struggled over the past 12 months – its net asset value (NAV) per share rose just 1.7% for the 12 months to the end of September, compared with 18.3% for the MSCI ACWI index, which tracks both developed and emerging markets. Five-year returns are now 38.9%, compared with 75.5% for the index.
A frustrating year for AVI Global Trust
AVI Global Trust is not constrained by region or size. Roughly half the portfolio is now allocated to undervalued companies in Japan and Korea, 19% to closed-ended funds (investment trusts and similar structures) and 31% to holding companies, typically controlled by families.
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The trust’s positions in Japan and Korea performed well this year through to the end of September, rising 17% and 44% respectively, but performance was more mixed in other segments of the portfolio. Investment trust Chrysalis and French media holding company Vivendi, collectively detracted nearly 8% from overall performance. Shares in Vivendi have lost 43% over the past 12 months, tracking the performance of Universal Media Group, its key underlying asset, which has lost more than half its market value this year.
AVI Global Trust believes this is more cyclical than structural: the group’s adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) have risen by more than two-thirds in three years, even as the shares have lost a third of their value. Vivendi’s issues have been compounded by a battle with billionaire Vincent Bolloré, who owns 29.9%, just below France’s 30% threshold for a mandatory bid. The market had priced in a takeover, but after a Paris Court of Appeal ruling that Bolloré had no effective control – and no legal obligation to make a takeover offer – the shares slumped 12% in a day.
Vivendi’s issues illustrate why AGT’s management team at Asset Value Investors – led by Joe Bauernfreund – labelled 2026 a “frustrating” year. The trust was also hurt by the performance of D’Ieteren, the largest holding at 6.6% of NAV, whose shares have gone nowhere since the beginning of 2024. Still, AGT’s focus is on the value on the balance sheet. D’Ieteren owns 50% of Belron, the vehicle-glass repair giant, which is aiming for a €30 billion initial public offering (IPO) in Amsterdam. This would unlock billions for D’Ieteren, which is valued at just €9.7 billion.
AVI Global Trust’s approach offers a safe haven
AVI Global Trust’s approach is to find value and wait for it to be unlocked. Over the past three years, the market has focused on AI and growth, while value has been left behind. But AGT’s approach offers something of a safe haven against uncertain times. Buying assets at a deep discount to underlying value gives investors a wide margin of safety.
AGT is also one of the few trusts in London that offers significant exposure to small and medium-sized Japanese and Korean businesses, two markets where governance reforms are creating significant value. Asset Value Investors’ experience in these two markets give it an edge over other managers.
Any fund can have a weak year, so we should not read too much into the one-year return. AGT’s five-year record now looks a bit low against the MSCI ACWI, but all value strategies face the same headwinds. Absolute performance is still positive. The key question will be whether it starts to outperform as air hisses out of the AI bubble.
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