Brunner Investment Trust Reports 9% Return and 54th Consecutive Dividend Increase

Why that matters: Brunner’s discipline explicitly avoids speculative, loss-making companies. In periods like 2025, when unprofitable high-growth stocks fly, a quality-biased approach can look pedestrian. The trade-off is intentional. Historically, these episodes of concentration tend to mean-revert – and Brunner’s board is betting its quality-and-cashflow tilt will be rewarded over the long run.

How Brunner is playing AI without chasing hype

AI was the market’s main event. Brunner emphasises participation “without speculation”, leaning into the infrastructure layer and durable cash generators. Notable holdings include:

• Taiwan Semiconductor (TSMC), ASML and Amphenol – essential picks-and-shovels for the AI buildout.
• Alphabet – exposure to large language models and custom AI chips.

At the top of the portfolio you’ll also find Microsoft (6.2% of funds) and Alphabet (5.3%). The managers highlight a useful Q4 reminder: as some AI leaders stumbled on elevated expectations, more value-oriented sectors, including healthcare, rallied. That supports Brunner’s diversified stance.

Portfolio shape: diversified by region and sector

Geographically, the trust remains global:

• North America: 44.5%
• United Kingdom: 25.7%
• Continental Europe: 20.5%
• Pacific Basin: 6.0%
• Japan: 3.3%

The top 20 holdings blend compounders and cyclicals: Microsoft, Alphabet, TSMC, Visa, Bank of Ireland Group, SSE, AIA, InterContinental Hotels, TotalEnergies, Thermo Fisher Scientific, ASML, Corpay, Shell, Charles Schwab, Schneider Electric, Auto Trader Group, Amazon, Itochu, GSK and AMETEK. That mix lines up with the “balanced diversification with no dominant style” that the board keeps hammering home.

Income engine ticking over

Income was essentially flat year-on-year at £15.2 million (2024: £15.2 million). Investment management fees and admin expenses were well-contained relative to portfolio size. Profit after tax came in at £55.6 million (2024: £96.1 million), reflecting the smaller capital gain in a less forgiving stock-pickers’ market.

Cash rose to £17.6 million, helped by a strong operating cash inflow (£26.9 million). The trust also repaid a £10.0 million revolving credit facility during the year – a tidy de-risking move – while long-term debt remains at £25.1 million.

Discount discipline and capital moves

Brunner continues to manage its share base pragmatically: small issuances during the year raised £8.1 million; modest buybacks into treasury totalled £0.1 million. No specific discount or premium figures are disclosed, but the board reiterates it will buy back shares when it considers it expedient.

Risks and how to think about them

The board flags three “red” areas to keep front of mind:

• Market volatility – macro shocks can hit valuations, income and gearing.
• Geopolitical uncertainty – from US-China tensions to conflicts in Ukraine and the Middle East.
• AI-driven disruption – rapid shifts in winners and losers across sectors.

In English: concentration risk is real, and geopolitics will continue to intrude. Brunner’s response is to double down on prudent diversification, quality balance sheets and cash generation, with active management within tight risk parameters. It won’t capture every manic rally – but it aims to protect capital and compound steadily.

Management bench strengthened

James Ashworth has been appointed co-lead manager alongside Julian Bishop (James had served as deputy since early 2024). Christian Schneider and Simon Gergel remain named deputies. Succession planning matters for a long-duration trust; this looks like a sensible evolution rather than a reset.

Why this update matters for shareholders

• Income predictability stands out: 25.0p total dividend, covered by earnings, with revenue reserves at 35.6p.
• Quality-first discipline is intact, even after a year when speculative growth led the line.
• AI exposure is meaningful but measured, anchored in infrastructure and cash generative names.
• Balance sheet looks sound: higher cash, RCF repayment, and steady long-term debt.

On the flip side, underperformance versus a narrow benchmark is frustrating, and the board itself puts market volatility and geopolitics in the “red” bucket. If you’re comfortable with Brunner’s deliberate trade-off – resilience over racy – the case for core portfolio status remains intact.

Dates for your diary: AGM and dividend

• AGM: 11.30 am on Tuesday 31 March 2026 at Trinity House, Trinity Square, Tower Hill, London, EC3N 4DH.
• Proposed final dividend of 6.25p: ex-div 26 February 2026; record 27 February 2026; pay date 3 April 2026.

Josh’s take

Brunner did what it says on the tin: preserved balance, grew income, and stayed disciplined when the market rewarded a narrow club of expensive winners. That cost relative performance this year, but strengthens the long-term compounding case. If you want a steady global core holding with a near “set-and-collect” dividend profile, this update is reassuring. If you’re chasing the hottest AI theme of the month, Brunner won’t be your thrill ride – and that’s precisely the point.