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: Visa.
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I'm Julian Bishop, 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 through market cycles. And to do this, we seek a balance between investment attributes such as quality, value and growth. Predominantly, we invest in high quality companies at a fair price on hold them for the long term.
Some - like Visa - are household names. There are billions of Visa debit and credit cards in use around the world and whilst the brand might be familiar, the business model on which it's built its success is perhaps less well known.
As one of the world's leading digital payments networks, Visa takes a very small cut whenever its cards are used at of the millions of merchants that accept them. These minuscule fees are multiplied hundreds of billions of times over. The combination of vast numbers of cards in circulation, issued by thousands of financial institutions and accepted at millions of points of sale, creates a formidable network effect that acts as a very powerful barrier to competition. And importantly, unlike most other financial institutions, they don't carry credits or interest rate risk.
Powerful structural trends have underpinned growing sales and impressive margins. As it appears that we are transitioning to a cashless society and the number of contactless payments soar. Visa is converting $18 trillion in consumer spending, from cash and cheques to digital payments and enhancing financial inclusion.
In many ways Visa has been a perfect investment for The Brunner Investment Trust. It's a company which is demonstrating competitive resilience and has a history of delivering consistent growth in revenues and profitability over many years. We can't predict the future, and we're not making an investment recommendation. But our belief in Visa's business model and outlook have made this a core holding for Brunner, and our all-weather portfolio.
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. Past performance does not predict future returns.
Visa Stock Story: Inside the BUT Portfolio
Come rain or shine, the expertly managed Brunner Investment Trust aims to thrive in all market conditions. It has stood firm in the face of changing economic seasons, volatility and market fluctuations aiming to protect, nurture and grow shareholders’ investments. The Trust’s focus on investing in resilient businesses helps to smooth returns and navigate market turbulence.
Why Brunner Investment Trust has invested in Visa
Some of the businesses the Trust invests in, like Visa, are household names. Billions of Visa debit and credit cards are in use around the world. However, while the brand is probably familiar, the business model on which the company has built its success is, perhaps, less well known.
As one of the world’s leading networks of digital payments, Visa takes a very small fee whenever one of its cards is used at any of the millions of merchants that accept them. These minuscule fees are multiplied hundreds of billions of times over. The combination of vast numbers of cards in circulation, issued by thousands of financial institutions and accepted at millions of points of sale worldwide creates a network that is very hard to replicate and acts as a formidable barrier to competition.
Importantly, and unlike most other financial institutions, Visa is not affected by credit risk (the possibility of loss due to a borrower’s defaulting on a loan) or interest-rate risk (the probability of a decline in the value of an asset resulting from unexpected fluctuations in interest rates).
Cashless drive boosting Visa
We believe that powerful structural trends have underpinned growing sales and impressive profit margins. As the world transitions to a cashless society and the number of contactless payments soars, Visa is converting US$18 trillion of consumer spending from cash and cheques to digital payments. In the process, it is enhancing financial inclusion: Visa brings many people with a mobile phone into the formal financial system.
Visa is a good example of the companies that The Brunner Investment Trust targets. It has demonstrated competitive resilience and has a history of delivering consistent growth in revenues and profitability over many years.
The benefits of diversification
However, it is impossible to predict the future, so this article should not be taken as a stock recommendation or judgement on the Visa share price. Investing in Visa and other equities is always risky, and potential downsides face any individual stock, whether they are related to a change in the competitive landscape, the emergence of new regulations, or a downturn in a particular sector or the economy in general. Adverse developments in any of these areas – and others – could affect the Visa stock price.
So, it might be wise to invest in a professionally-managed investment vehicle such as The Brunner Investment Trust, which holds a number of companies including Visa 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.