Weir Group helps venerable Scottish investment trust mine rich seam of returns

A strong performance from Glasgow-headquartered engineering group Weir helped one of Scotland’s oldest investment trusts outperform its benchmark in its first year under new management.

Friday, 28th May 2021, 12:33 pm

The £1.1 billion Edinburgh Investment Trust delivered total net asset returns of just under 35 per cent during the year to 31 March, compared to the 26.7 per cent seen across the FTSE All-Share Index.

Weir, a key supplier to the mining sector and which has seen its shares double over the past year, was one of the portfolio’s biggest contributors to the outperformance.

Fund manager James de Uphaugh of Majedie Asset Management, which took over the running of the 132-year-old trust at the end of 2019 after several years of underperformance, highlighted Weir’s progress in helping customers in sectors such as mining become more sustainable as a key factor in its strong showing.

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Weir's work to help customers improve the sustainability of their operations has helped boost its performance.

“Weir, with a rich Scottish heritage, has become a key supplier of engineering solutions that help improve their customers' safety, efficiency and sustainability,” he said.

Another strong contributor to the trust’s performance was mining group Anglo American which benefited from rising commodity prices over the last year.

“More importantly, it has made changes to the profile of its business, including the welcome sale of its thermal coal assets – something we have been engaging with management on for some time,” said de Uphaugh.

One of the weakest performers was Tesco, despite what the trust said had been a strong year operationally for the supermarket giant.

“Its share price was subdued, even though it – along with the other UK supermarkets – did an excellent job of prioritising food availability over profits.”

He said the appointment of a new chief executive and finance director provides the trust with confidence that Tesco can build on the operational progress of the last year, and it has been adding to its stake in the business.

De Uphaugh said that overall it had been an “encouraging start” to Majedie’s role as manager of the trust which mainly focuses on UK stocks.

“Despite the strong last year, on a medium-term view there is still much to go for,” he added.

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