As with any investment, your capital is at risk.
In the early 1500s, European sailors seeking riches in the East might have taken the most obvious and direct route, down the Atlantic, around Cape Horn and into the Pacific.
Many would have failed, battered by the violent seas or the strong westerly winds known as the ‘Furious Fifties'. The explorer Ferdinand Magellan chose a different path through a narrow strait that now bears his name. It was longer, but provided a more sheltered route to the calmer waters beyond.
Markets this quarter have felt a little like those treacherous seas. With another Strait – that of Hormuz – dominating headlines. Its closure has disrupted energy markets, and the potential implications have troubled already nervous markets.
The index, the FTSE All-World, fell back in March from February highs, delivering a 1 percent loss over the quarter, and value outperformed growth as investors sought the perceived safety of cheaper, lower-growth companies.
Bottlenecks and abundance
Against this backdrop, Monks' net asset value (NAV) and share price declined over the quarter, lagging global markets. However, over the volatile 12 months to end March 2026, the trust has returned NAV gains of over 17 percent and share price gains ahead of the benchmark.
Beneath these headline moves, two powerful themes have emerged.
The first is that rising geopolitical tensions, fragmented politics and increased capital spending are creating physical bottlenecks that create growth opportunities.
The second is the rapid advance of artificial intelligence (AI), which is making certain forms of ‘intelligence', such as software coding, easier and more abundant. This has led to sharp share price falls in software and digital businesses.
These are choppy waters, but they are also revealing new routes forward.
An expansion of growth
For much of the past decade, growth has been driven by asset-light, highly scalable technology businesses. That opportunity set remains important, but we are seeing it broaden.
The world may be entering a phase where growth is more capital-intensive. Investment in energy systems, electrification, reshoring manufacturing and supply chains, and AI infrastructure is increasing after years of underinvestment. This shift brings new opportunities in areas previously less prominent in the portfolio.
We have been adjusting Monks accordingly. We've increased exposure to companies benefiting from this more physical layer of growth, including those linked to energy (Petrobras), AI chips (Samsung) and critical materials such as copper (Freeport-McMoRan).
We've also added selective exposure to financials, through the banks SEB in Sweden and UOB in Singapore. These are well-run businesses that should benefit from rising demand for capital and offer attractive, sustainable returns.
Overall, the aim is simple: broaden the portfolio's sources of growth to reflect how global bottlenecks are evolving.
The freedom to be ambitious
This broadening has another benefit. By diversifying the portfolio, we create space to remain ambitious in areas where we have strong long-term conviction, particularly where sentiment is weak.
Software and ecommerce are good examples. The perceived threat of AI disruption to business models reflects genuine uncertainty, but, in our view, pessimism does not reflect how well-positioned many of our holdings are to navigate it.
Take businesses such as ecommerce services company, Shopify. Its value lies not just in the software or app, but in the complex systems they have built which connect customers, suppliers and logistics at scale.
As AI lowers barriers to building applications, these real-world networks and operational capabilities may become more valuable, not less.
We have used recent weakness to add to these holdings and others, where we believe the long-term opportunity remains compelling.
At the same time, we have been disciplined in reducing or exiting positions where our conviction has weakened. In Salesforce's case, for example, we felt its core sales software business could be disrupted faster than it could roll out new AI tools.
In a fast-moving environment, it is important to ensure the portfolio is positioned behind those companies best able to adapt and thrive.
Putting it all together
These shifts have led to a more active period for the portfolio, with turnover increasing as we reposition Monks for a changing world.
Encouragingly, we have done this while maintaining the portfolio's core characteristics: exposure to companies with strong growth prospects, robust competitive advantages and the ability to compound returns over time.
By repositioning the portfolio, the Trust's performance from here should not be driven by any single market factor or outcome. It should be down to the progress of the businesses we own. Those companies delivering the superior profit growth that we think they are capable of.
Valuations have also become increasingly supportive. The portfolio's valuation relative to the index has reached 10-year lows, which, given the higher expected growth and quality, offers a robust foundation for returns.
We do recognise that these fundamentals can take time to translate into performance. Markets can be unpredictable over shorter periods, particularly in recent, more volatile years. Our focus is therefore not just on where we invest, but on how we navigate the journey.
By broadening the opportunity set, maintaining conviction in long-term winners and being willing to adapt where needed, we believe Monks can capture growth and translate it into returns, however the world evolves.
We may not always find calm waters, but we can aim to steer a steadier course, to avoid the worst of the storms while keeping firmly on track towards long-term growth.
The Monks Investment Trust plc
Annual discrete performance to 31 March (%)
|
|
2022 |
2023 |
2024 |
2025 |
2026 |
|
Share Price |
-17.5 |
-12.7 |
18.7 |
1.4 |
20.9 |
|
NAV |
-9.4 |
-7.8 |
20.1 |
0.0 |
17.5 |
|
FTSE World Index |
14.9 |
-0.7 |
22.5 |
4.8 |
19.4 |
Source: Morningstar, FTSE, total return in sterling
Past performance is not a guide to future returns.
Important information
This communication was produced and approved in April 2026 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.
The Trust invests in overseas securities. Changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up.
This article does not constitute, and is not subject to the protections afforded to, independent research. Baillie Gifford and its staff may have dealt in the investments concerned. The views expressed are not statements of fact and should not be considered as advice or a recommendation to buy, sell or hold a particular investment.
Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). The investment trusts managed by Baillie Gifford & Co Limited are listed on the London Stock Exchange and are not authorised or regulated by the FCA.
A Key Information Document is available at bailliegifford.com
FTSE index data
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