Brunner Investment Trust
Why is this fund on our radar?
The Brunner Investment Trust (BUT) aims to provide investors with a smooth investment journey through a portfolio of stocks from companies around the world. Managers Julian Bishop, James Ashworth, Christian Schneider, and Simon Gergel typically invest in approximately 50 stocks, ensuring that the portfolio only holds companies they have the strongest confidence in.
However, the team puts a strong emphasis on diversification, ensuring the stocks they invest in have different characteristics, which should help the portfolio adapt to different conditions. They also aim to reduce the risk of losses, with the managers making sure they pay a reasonable price for the stocks they buy, as companies whose shares are already expensive can see sharp falls if they fail to deliver the profits investors expect.
This focus on limiting losses has been evident over the past five years, as BUT has grown investors’ money while falling less than passive funds when the broader market declined. While the trust has not managed to outperform a passive alternative, notably as it had less invested in stocks related to artificial intelligence (AI), there could be better days ahead if returns come from a wider range of stocks in the future. In addition, it is worth noting that BUT uses a custom benchmark to assess its performance, consisting of 30% UK stocks (FTSE All-Share) and 70% stocks from the rest of the world (FTSE World ex-UK Index), as the trust typically invests significantly more in domestic companies. Finally, BUT has increased its dividend annually for 54 consecutive years, an impressive track record and an attractive feature of the trust, as it can provide a source of return when share prices do not rise.
Skip to Our VerdictPerformance
BUT aims to provide investors with a portfolio that can adapt to different market conditions. This is why the managers want the portfolio to be well diversified, investing in distinct types of companies operating across different industries.
This emphasis on diversification has enabled BUT to perform well in several different market environments. For example, the trust benefited from its holdings in companies exposed to areas like digital transformation and the ageing population in 2021. BUT then fell significantly less than passive alternatives in 2022. In that year, central banks sharply raised interest rates, with higher rates typically making investors less patient with companies promising great returns several years down the line (with this potential often reflected in expensive share prices), and more likely to favour those that can deliver profits now (whose shares are typically cheaper). As such, the team’s emphasis on paying sensible prices for the stocks they invest in paid off, with the trust also benefiting from its holdings in healthcare companies, which tend to be more resilient in tough environments because they provide essential products and services.
However, BUT has struggled to beat passive funds since 2023. This is because the initial release of ChatGPT in November 2022 sparked a wave of enthusiasm for AI, leading the share prices of companies involved in its development to rise sharply. Yet, the stocks benefiting from the AI boom have been few in number, and while BUT has held some of them, they have generally accounted for less of its portfolio than they did in passive funds. This is because the team wants to avoid relying on a single investment trend, while also noting that many AI-related stocks are expensive, meaning their share prices could fall sharply if the underlying companies fail to deliver the returns investors expect.
As a result, BUT has struggled against passive funds over the past five years (to the end of August 2026). That said, the trust has still delivered positive returns, meaning that it has grown investors’ wealth. In addition, it is worth noting that BUT has provided some protection to investors, as it has typically lost less money than passive funds when the broader market fell.
calendar-year returns
Source: Morningstar
Past performance is not a reliable indicator of future results
Portfolio
BUT aims to provide investors with a portfolio that can deliver returns steadily across different market conditions. To achieve this, the managers invest in different types of companies, which they group into three broad categories: ‘stable growth and income’, ‘rapid growth’, and ‘mature cash cows’.
‘Stable growth and income’ is the largest category, accounting for approximately 60% of the portfolio. It consists of businesses that can generate returns in two ways: through an increase in their share price and by returning cash to shareholders, for example through dividends. The ‘rapid growth’ category is made up of companies where returns mainly come from an increase in their share price. Meanwhile, the ‘mature cash cows’ category, which also accounts for 20% of the portfolio, includes companies that mainly reward shareholders by returning cash to them. Typically, these three categories of stocks perform well at different times, which should help the portfolio adapt to diverse market conditions.
Another notable feature of BUT’s portfolio is that it typically invests significantly more in UK stocks than passive funds, as well as most other actively managed funds that invest in global stocks. This is because the managers see the UK as a market rich in established companies operating in mature industries that generate a lot of cash and whose shares are available at attractive prices.
Georgraphic breakdown
Our Verdict
In our view, BUT could suit investors wanting to invest in companies around the world in a cautious way. This is because the team ensures the portfolio remains well diversified, so it is not reliant on a single trend or a handful of stocks, while also aiming to pay sensible prices for the businesses they invest in, as stocks with expensive share prices can fall sharply if they fail to deliver the expected returns. This cautious approach has been reflected in the way the trust has behaved over the past five years, as BUT has typically fallen less than passive funds when the broader market declined.
Meanwhile, the emphasis on diversification, with three distinct categories of holdings, means that BUT should be able to adapt to a broad range of market environments, as it demonstrated in years as different as 2021 and 2022. However, it is worth noting that diversification could work against the trust when a specific trend or just a few stocks dominate returns in the broader market, as has been the case with AI-related stocks since 2023.
Finally, an important part of BUT’s investment proposition is its dividend, which can offer a source of return when share prices struggle to rise. In fact, the trust has increased its dividend annually for 54 consecutive years, and as it is an investment trust, the board has reserves which could allow it to continue this record even if the income it earns falls one year.
Key Risks
- BUT’s well-diversified portfolio could struggle against passive funds when most of the gains in the broader market come from just a few stocks
- Large allocation to UK stocks could work against BUT when other markets perform better
- BUT can use gearing, or debt, to invest, which can amplify both returns and losses
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