Page 11 - DIY Investor Magazine | Issue 36
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      JL: How is this affecting the portfolio or investment thesis, particularly given the focus on growth?
CS: Yes, excellent question. It has had kind of a dual effect. One is a very technical one, and it impacted the broader market simply with rising interest rates and a rising risk premium on the back of the war in Ukraine. The discount rate for future cash flows – if you value any assets, you discount future cash flows – was going up simply in Q1 and Q2, one on inflation, secondly, on the risk premium going up. Now, that simply means that future cash flows are worth less today, and asset prices are falling.
And that’s what we’ve seen. Equity markets came off significantly. The second effect is on the inner workings of single companies and how it affects their balance sheet and P&L and cash flow statement. And it had clearly given different effects. Energy companies, some utilities, had super strong gains in
this period as they are dependent on the energy price, and rising prices led to some significant extra profits. For most other companies, though, it was an increase in input costs. And it was dependent then, on how much a company was able to raise prices and roll prices through to its customers in order to protect the P&L and balance sheet.
Now we at Brunner have a very firm view on quality growth investments. We have a dual goal of paying an ever-rising income stream to our shareholders, but also to generate over time, capital growth as well. And, as such, highly profitable companies with a bit of growth: this is what we were looking for.
The quality angle gave us some support, given that our companies are typically able to roll through prices given that they have pricing power – they operate in good industries with not too much competition. And so, The Brunner Investment Trust wasn’t as terribly affected as many super growth strategies have been in this period of time, or very cyclical companies have been that are strapped for cash. Even in normal times those get into trouble if interest rates rise and they can’t roll through prices.
JL: On that note let’s bring this edition of Connected Investor to a close; thank you for listening and thank you to Christian Schneider, and make sure you subscribe, so you don’t miss an episode. To find out more about Brunner, please go to www.
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All sources Allianz Global Investors GmbH unless otherwise noted. This is no recommendation or solicitation to buy or sell any particular security. A security mentioned as example above will not necessarily be comprised in the portfolio by the time this document is disclosed or at any other subsequent date. Investing involves risk. The value of an investment and the income from it may fall as well as rise and investors may not get back the full amount invested. Past performance does not predict future returns. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer and/or its affiliated companies at the time of publication.
This is a marketing communication issued by Allianz Global Investors GmbH, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, D 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht ( The summary of Investor Rights is available at https://regulatory.allianzgi. com/en/investors-rights. Allianz Global Investors GmbH has established a branch in the United Kingdom, Allianz Global Investors GmbH, UK branch, 199 Bishopsgate, London, EC2M 3TY,, deemed authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website ( Details about the extent of our regulation by the Financial Conduct Authority are available from us on request. The Brunner Investment Trust PLC is incorporated in England and Wales. (Company registration no. 226323). Registered Office: 199 Bishopsgate, London, EC2M 3TY.
Dec 2022
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