Brunner Investment Trust grows NAV and dividend but trails AI-driven benchmark

Brunner's half-year results at a glance

Brunner Investment Trust delivered positive returns and stronger income during the six months to 31 May 2026, but its diversified approach struggled to keep pace with an increasingly concentrated, technology-led market.

Net asset value, or NAV, produced a total return of 5.6%, while the share price total return was 8.1%. NAV represents the value of the trust's assets after liabilities. The share price performed better because the discount to NAV narrowed slightly over the period.

The awkward comparison is Brunner's benchmark, which returned 12.0%. That left the trust 6.4 percentage points behind on a total return basis.

Key figure	Six months to 31 May 2026	Comparative figure
NAV total return, debt at fair value	5.6%	-1.5% in 2025 period
Benchmark total return	12.0%	-0.1% in 2025 period
Share price total return	8.1%	Not disclosed in headline table
NAV per share, debt at fair value	1,640.1p	1,565.8p at 30 November 2025
Share price	1,506.0p	1,406.0p at 30 November 2025
Earnings per share	19.7p	17.3p
Dividend per share	13.5p	12.5p
Average discount	8.8%	3.3%

These are respectable absolute figures. However, the results also underline the central debate facing Brunner shareholders: whether a more balanced portfolio is worth tolerating periods of significant benchmark underperformance.

Why Brunner lagged the market

The benchmark is made up of 70% FTSE World Ex UK Index and 30% FTSE All-Share Index. Its strong return was heavily influenced by artificial intelligence infrastructure spending and a relatively narrow collection of technology-related winners.

Brunner was not absent from that trend. Taiwan Semiconductor Manufacturing Company, commonly known as TSMC, rose 40%, while semiconductor equipment supplier ASML gained more than 50%. Microchip was the portfolio's strongest individual contributor as demand began to recover.

The problem was that Brunner held less exposure to AI beneficiaries than the benchmark. It also did not own memory-chip manufacturers Micron, Samsung or SK Hynix, whose shares rose between 200% and 323% during the half year.

That decision was deliberate. The managers are concerned about the valuations and cyclical risks attached to these businesses, particularly if memory prices eventually return towards historical norms.

There is a clear trade-off here. Avoiding highly valued market leaders can protect capital if enthusiasm fades, but it creates substantial relative underperformance while those shares continue rising.

A genuinely diversified portfolio

Brunner describes its strategy as an "all-weather" approach. Rather than closely copying an index that has become heavily influenced by technology and AI, the managers aim to spread exposure across sectors, regions and business models.

Positive contributions came from IG Group, TotalEnergies, ConocoPhillips, Kia and CBIZ, as well as semiconductor holdings. Energy exposure was particularly useful as geopolitical disruption pushed oil and gas prices higher.

The largest detractor was Auto Trader. Investors have worried that AI services could allow consumers to search for cars without using its platform. The managers argue that Auto Trader's strength comes from aggregating more than 400,000 vehicles from around 23,000 dealers, rather than simply from how users access that information.

S&P Global also suffered from fears around AI disruption, while Thermo Fisher Scientific faced sluggish customer spending. Microsoft weakened as concerns grew about the uncertain returns from its rising AI infrastructure expenditure. Brunner reduced its Microsoft position and said it was continuing to review the investment.

Portfolio activity stepped up

This was an active six months, with ten new investments and five complete disposals.

New positions included Lloyds Banking Group and Wells Fargo, where the managers expect strong cash generation and significant capital returns through dividends and buybacks. Brunner also purchased ConocoPhillips, BMW, Melrose Industries and US motor insurer Progressive.

The trust took advantage of falling valuations among data-rich and intellectual property-led businesses. It repurchased RELX shares after selling them at more than £35 in August 2025, buying back at £22 in February 2026. New holdings were also established in Equifax, Booking Holdings and CBIZ.

Brunner sold Amphenol following strong AI-related gains. Roper and Paycom were exited because of concerns that AI could lower barriers to competition in software. The trust also sold Partners Group and shares in The Magnum Ice Cream Company received through its demerger from Unilever.

Purchases totalled £125.1 million and sales reached £123.4 million, compared with £76.6 million and £68.7 million respectively in the previous half year.

Income growth remains a major positive

Income available for ordinary dividends increased by 13.7% to £8.5 million, while earnings per share rose 13.9% to 19.7p.

The first interim dividend was set at 6.75p per share and is due for payment on 24 July 2026. The board also declared a second interim dividend of 6.75p, payable on 18 September 2026.

It anticipates that the remaining two payments for the year will be at a similar level. That would produce a full-year dividend of 27.0p per share, an 8.0% increase from 25.0p last year.

This forecast is supported by revenue reserves which, according to the board, comfortably cover a full year's dividend payment. The revenue reserve stood at £23.9 million at the half-year end, up from £20.8 million at 30 November 2025.

Brunner has delivered 54 consecutive annual dividend increases. That record does not guarantee future growth, but the higher earnings, reserves and planned payments provide useful visibility for income-focused shareholders.

The discount remains stubbornly wide

The shares ended the period at 1,506.0p, compared with a fair-value NAV of 1,640.1p per share. Although the discount narrowed slightly during the half year, its average level was 8.8%, up from 3.3% in the comparable period.

A discount means investors can buy the trust's underlying assets for less than their stated NAV. It can offer upside if the gap closes, but a persistent discount can also weigh on shareholder returns and signal weak demand.

Brunner spent £2.2 million buying back shares during the period. A further 100,324 shares were repurchased for £1.5 million between the period end and the report date. Buybacks can modestly improve NAV per remaining share when conducted at a discount, although they do not guarantee that the rating will recover.

What investors should watch next

Brunner's half year was financially solid but relatively weak. NAV, the share price, earnings and dividends all moved in the right direction, yet the trust lagged its benchmark by a meaningful margin.

The key question is whether today's narrow AI-led market broadens out. If investors place greater emphasis on valuation, cash generation and diversification, Brunner's positioning may look more attractive. If technology and AI-related shares continue dominating returns, further benchmark underperformance remains possible.

Other risks include geopolitical disruption, inflation, interest-rate sensitivity and uncertainty over the returns companies will ultimately earn from massive AI investment. The portfolio's broad spread may provide some resilience, but it cannot remove equity market risk.

For now, Brunner is sticking firmly to its balanced approach rather than chasing the most fashionable parts of the market. Shareholders are receiving growing income and positive absolute returns, but patience with that strategy is being tested by a powerful and unusually concentrated benchmark rally.