Momentum Multi-Asset Value reflects strong year with total returns close to 50%


Momentum Multi-Asset Value (MAVT), formerly Seneca Global Income & Growth, has released its annual results ended April 30, 2021 NAV total return was 47.9% while the Benchmark Yield was 7.5% (RPI Index which the CPI replaced).

" class="glossary_term">CPI plus 6% per year). The return to shareholders was 48.5%.

MAVT noted this in relation to some of the company’s developments during the year In March the company adopted its new name Momentum Multi-Asset Value Trust plc, reflecting the sale of the manager (Seneca Investment Managers Limited) to Momentum Global Investment Management (MGIM). The new company name also clearly describes the multi-asset portfolio and MGIM’s value investing style.

It should be reiterated that the investment management team responsible for the firm’s strong performance has not changed as a result of the sale.”

Will there be more to close the gap between value stocks and growth stocks?

MAVT’s managers report had this to say:

“In recent years, the environment has not been favorable for our value investment style. Over the past decade, we’ve seen significant outperformance by the growth style, which has even accelerated over the past five years. The valuation spread between value and growth stocks was compelling prior to the pandemic, but lockdowns caused by COVID-19 further widened the gap as growth stocks, technology and healthcare companies in particular benefited. In many cases the market appeared to have completely abandoned normal valuation discipline and instead growth expectations, sentiment and momentum became the dominant drivers of investment decisions – this is the complete opposite of our investment approach. We’ve seen all of this before, and using history as an indicator, disregard for valuation discipline always ends abruptly and a strong value cycle ensues. We believe we are entering another rotation in a strongly supportive environment for MAVT’s investment style.

We seek to invest in stable, “real” areas such as toilet paper manufacturers, home builders, underwear brands and insurance companies. MAVT’s investments are always backed by real cash flows, which are distributed to investors or reinvested to increase long-term returns. There is no sentiment, hype, or momentum that can feed into your investments’ stock price and be wiped out overnight.

While some sectors of the market still trade at exceptionally high valuations, MAVT owns an investment portfolio with attractive fundamentals. For example, your company’s Japanese equity exposure is trading at 51% at a price-to-book ratio of 0.74x at the time of writing market capitalization consisting of cash and investments. Its US equity exposure has shown stronger earnings per share growth than the S&P 500 over the long term, but currently trades at a price-to-earnings multiple of 12x, compared to 22x for the index. Your company’s UK equity exposure trades at a price-to-book ratio of 1.4x versus 2.3x for the index, yet the average return on equity is 13.8% versus the index average of just 8.8%.

2020 has been an exceptional year for returns, but valuation anomalies earlier in the year have been so large that we believe we are just beginning to close the gap between value stocks and growth stocks.

The period includes the recovery from markets which we thought were severely oversold in late March 2020 as the COVID-19 pandemic hit the world. There are several key factors that have contributed to the significant returns your business has achieved.

Style: After a decade of underperformance, this year has seen numerous catalysts that have turned the fortunes of value and growth styles in favor of value.

UK Stocks: The UK market was already trading at a deep discount to other global markets due to Brexit uncertainty. This was compounded by the UK government’s slow initial response to handling the pandemic. We saw this as an excellent opportunity as six new investments were added to our UK exposure and additions were made to several existing investments which were trading at historically low valuations. In the second half of the period, the company’s UK equity investments rose 63%, while the index rose 29%. As a result, the firm’s UK equity exposure was the largest contributor to returns over the year, accounting for about half of the 47.9% NAV total return, although on average it represented just over a third of the portfolio by weight.

Active management: market volatility The past year offered investors opportunities and risks in equal measure. We have looked for compelling new opportunities in quality stocks that were previously trading above our valuation threshold but have corrected to more reasonable prices. We have also increased some of our current investments at attractive levels. Additionally, we took the opportunity to lock in profits on stocks that have outperformed during the pandemic by reducing them Investec Global Gold and Merian Chrysalis (now renamed Chrysalis). The proceeds from these divestitures were then invested in stocks that were trading at lows, such as: Halbfords, arrow global and Purple brick. These companies consequently contributed significantly to the performance.

In addition to the broader areas discussed above, it is also worth considering some of the key contributors to performance at the individual stock level.

Contribution analysis by individual holdings in the year ended April 30th 2021:


asset class


1. Global Arrow Group

British stocks


2. Halfords group

British stocks


3.Purplebricks group

British stocks



British stocks


5.Chrysalis Investments

special assets



asset class


1. Babcock International Group

British stocks


2.DP Plane I

special assets


3.Round Hill Music Royalty Fund

special assets


4.Kier group

5. Accrol Group

British stocks

British stocks



There was no major performance hit. DP Aircraft has been badly hit by the pandemic, but as one of the smallest holdings in the portfolio, the impact has been relatively minor. Babcock International shares have come under pressure as the market feared new share issuance to strengthen balance sheet However, we did not think this was necessary and the stock was undervalued. While some of Babcock’s assets were impaired and the profitability of some contracts was written off, the amounts eventually announced were less than the market feared. The company has also ruled out raising fresh equity. We expect a strong recovery from here, with shares trading at a price-to-book ratio of 0.6x, compared to a 10-year moving average of over 2.3x.MAVT:”

[The returns for the period reflect a period of recovery following the sharp falls in NAV and share price in February and March last year. The NAV is now hitting new highs but the trust has an explicit objective of producing returns with low volatility and clearly failed in this regard. In our view, the Read our guide to Boards and Directors

" class="glossary_term">board should either remove this part of the objective or review what can be done to avoid a similar episode in future.]

MAVT: Momentum Multi-Asset Value reflects strong year with total returns close to 50%

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