Stock Stories brings you closer to the heart of our investment strategy. In these short, videos, Co-lead portfolio manager Julian Bishop discusses some of Brunner’s portfolio holdings and how they contribute to our overall strategic objectives of delivering growing dividends and capital growth for our shareholders by investing in a diversified set of high-quality companies from around the world.
In this short episode of ‘Stock Stories’, Julian discusses an investment decision that was made and is illustrative of the Trust’s strategy: Microsoft.
My name is Julian Bishop and I'm co-lead portfolio manager of the Brunner Investment Trust. It's important to remember that all investments come with risk. We aim to provide an all-weather portfolio that seeks to create wealth across market cycles. And to do this, we seek a balance between investment attributes such as quality, value and growth. Predominantly, though, we invest in high quality companies at a fair price and hold them for the long term.
A good example of our investment philosophy is Microsoft. It's hard to remember a time before the PC, and almost it's hard to recall a time before Microsoft dominated software. Unlike more speculative technology startups, Microsoft is already a very, very large, diverse and financially strong business, and people in companies around the world have come to depend on its software. At the start of 2024, there were more than 400 million subscribers to Office 365 it's well known a suite of applications that includes Word, Excel, PowerPoint and Teams. As a digital business, each new customer has very low additional costs, which is profoundly important for the company's profitability.
Over the decades, its success has been built on its ability to create, adapt, and envision the technologies of the future - from cloud computing to artificial intelligence. For people, companies and economies, AI is a game changer. Bloomberg Intelligence expects generative AI to become a $1.3 trillion market by 2032, and by providing cloud storage and services for new AI companies and adding Copilot AI functionality to its existing suite of products. Microsoft has established itself as one of the leaders in AI, further bolstering its relationships with businesses around the world.
Microsoft's market value crossed the $3 trillion mark for the first time in 2024. It's been a standout investment for The Brunner Investment Trust. Over the years, it has been one of the largest holdings in the portfolio, and it has consistently grown its dividends over the past decade and helped us to grow ours too, something Brunner has done for more than 50 years.
With its durable business model, robust cash generation and reasonable valuation, Microsoft is exactly the kind of company we like at Brunner. Well, this is not a recommendation and there are never any guarantees in investment, its resilience in the face of economic uncertainty makes it a perfect fit for our all-weather portfolio.
Disclaimers: Past performance does not predict future returns. Securities mentioned in this document are for illustrative purposes only and do not constitute a recommendation or solicitation to buy or sell any particular security. These securities will not necessarily be comprised in the portfolio by the time this document is disclosed or at any other subsequent date.
The statements contained herein may include statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. We assume no obligation to update any forward-looking statement.
Microsoft Stock Story: Inside the BUT Portfolio
The Brunner Investment Trust pursues a flexible and pragmatic approach that seeks to balance quality, value and growth when making investment decisions. In terms of quality, the Trust focuses on companies that we believe enjoy sustainable competitive advantages of some sort and are shielded from competition by high barriers to entry. The Trust also searches for companies that will still be pursuing the same business in decades to come and avoids enterprises which are at risk of structural decline.
Why The Brunner Investment Trust has invested in Microsoft
We believe that Microsoft, with its durable business model, robust cash generation and reasonable valuation, provides a good example of the Trust’s investment philosophy. It is hard to remember a time before the personal computer (PC) existed and almost as difficult to remember a period when Microsoft did not dominate the software used on those PCs. Unlike more speculative technology startups, Microsoft is already a very large, diverse and financially strong business. Many people in companies around the world now depend on its software.
At the start of 2024, more than 400 million users around the world subscribed to Office 365 and its well-known suite of applications, which include Word, Excel, PowerPoint and Teams. Since Microsoft is a digital company, each new customer it attracts adds very little cost. This is profoundly important for the company’s profitability.
Exploiting the potential of artificial intelligence
Over the decades, Microsoft’s success has been built on its ability to create, adapt and envision the technologies of the future, from cloud computing to artificial intelligence (AI). For people, companies and economies, AI is a game changer. Bloomberg Intelligence expects generative AI to become a US$1.3 trillion market by 2032. By providing cloud storage and services for new AI companies, and adding AI functionality to its existing suite of products, we believe that Microsoft has established itself as one of the leaders in AI, further bolstering its relationships with businesses around the world.
Microsoft’s market value crossed the US$3 trillion mark for the first time in 2024. The company has been a long-term holding for the Trust, consistently growing its dividends.
The benefits of diversification
However, it is important to remember that past performance is no guarantee of investment success, so this article should not be taken as a recommendation for investing in Microsoft or judgement on the Microsoft stock price. Investing in equities is always risky; potential threats always face Microsoft’s share price and that of all individual stocks, whether they stem from a change in the competitive landscape, the emergence of disruptive new players and technologies, adverse developments in the regulatory environment, or a downturn in a particular sector or the economy in general..
So, it might be wise to invest in a professionally-managed investment vehicle such as The Brunner Investment Trust, which can hold a number of companies such as Microsoft in the investment portfolio.
Article disclaimers
Securities mentioned in this document are for illustrative purposes only and do not constitute a recommendation or solicitation to buy or sell any particular security. These securities will not necessarily be comprised in the portfolio by the time this document is disclosed or at any other subsequent date.
The statements contained herein may include statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. We assume no obligation to update any forward-looking statement.