Monthly update

AVI GLOBAL TRUST PLC

Monthly Update

AVI Global Trust plc (the "Company") presents its Update, reporting performance figures for the month ended 30 April 2022.

This Monthly Newsletter is available on the Company's website at:

https://www.assetvalueinvestors.com/agt/content/uploads/2022/05/AGT-APR-2022-1.pdf

Performance Total Return

This investment management report relates to performance figures to 30 April 2022.

1 Source: Morningstar. All NAV figures are cum-fair values.

2 From 1st October 2013 the lead benchmark was changed to the MSCI ACWI ex US (£) Index. The investment management fee was changed to 0.7% of net assets and the performance related fee eliminated.

* AVI Global Trust financial year commences on the 1stOctober.  All figures published before the fiscal results announcement are AVI estimates and subject to change.

Manager's Comment

AVI Global Trust (AGT)'s NAV declined -2.9% in April as the portfolio weighted average discount widened 210bps to 30.5%.

Pershing Square Holdings, Sony, IAC and alternative asset managers Apollo Global Management and KRR were the notable detractors. Symphony International, Third Point Investors and Godrej Industries contributed positively.

Inflation and central banks' attempts to quell it remain the issue of the day. Rising bond yields and the re-pricing of risk has led to significant corrections in more Icarian parts of the markets. Whilst the impact at the equity index level had remained relatively muted, it is starting to become more meaningful. Volatility and uncertainty remain high. Investors are also increasingly concerned about global growth - with risks from central banks tightening too fast, continued lockdowns in China and the on-going war in Ukraine. Investors aren't short of things to worry about.

As is to be expected in such a risk-off environment, discounts have been widening, acting as a headwind to performance. This can be seen in a number of detractors over the month, notably Pershing Square Holdings, Sony and IAC.

Having reduced gearing last Autumn we have firepower to add to new and existing names, but so far we have been purposefully inactive. We remain optimistic about the long-term prospects of the high quality, well manged and lowly geared collection of companies we have assembled.

KKR and Apollo:

KKR & Co and Apollo Global Management were two of the largest detractors from performance in April, shaving a combined -99bps off AGT's NAV as the shares declined -13% and -20%, respectively. We wrote last October that "Driven by persistently strong results, we believe the wider market has begun to better appreciate the high quality characteristics of companies operating within the alternative asset management industry, and the secular tailwinds at their back that we believe are likely to drive growth long into the future."

Well, if indeed the market had come to appreciate this fact, no sooner was it learnt than it was forgotten. Shares in KKR and Apollo are both down -31% year to date, with other alternative asset managers suffering similar declines. Share price performance suggests investors view alternative asset managers as high beta plays on risk assets; we however contend that such an obtuse view ignores the defensive characteristics of scale-advantaged managers, and the structural growth trends the industry exhibits.

The current assets under management ("AUM") that alternative asset managers have is for the most part long-term or even permanent and so the risk of redemptions is very limited, while the proportion of fees earned on mark-to-market equity AUM is also very low; future AUM, i.e. AUM growth could in theory be affected of course, but the secular drivers towards greater allocations to alternatives are very much still in place with pension fund clients and SWFs (who form a majority of industry AUM) allocating to alternatives on decade-long views. In this context we believe alternative asset managers can continue to compound Fee Related Earnings ("FRE") per share at high level for many years to come. Even if one punitively assumes that carry is worth zero, excluding balance sheet investments, KKR and Apollo are trading at 14x / 13x fee-related earnings. We believe this to be great value.

Symphony International:

Symphony International was the most meaningful contributor to returns during the month. The shares rose +35% in local (dollar) terms, with Sterling weakness resulting in a +41% GBP return for AGT. This was driven exclusively by discount narrowing (indeed the NAV was marginally negative of the month) as the discount moved from 56% to 40%. This speaks to the powerful returns that can be earned when discounts reach extreme levels. Our view remains that a change to the company's strategy and to its Board will be required for shareholders to have a chance of capturing the latent value on offer, and we continue to engage with shareholders on this and other matters.

Godrej Industries:

During the month Godrej Industries announced the launch of Godrej Capital as a new subsidiary to act as the financial services arm of the group. Having started with home loans under the banner of Godrej Housing Finance last year, the group will expand upon this to offer Loans Against Property ("LAP"). Godrej have injected 1500 crore (3% of NAV) and believe the business will require a total of 5000 crore of capital in order to reach their target of a 30,000 crore ($4bn) balance sheet by 2026.

The Godrej family have a successful history of building businesses - such as Godrej Properties and Godrej Agrovet - and then listing them once they mature. We expect a similar path here and view the Godrej Group as rare in our universe in terms of having strong brand and trust equity than can be used to spawn new businesses. Over time the presence of an attractive unlisted asset in Godrej's NAV could well give other investors a "reason" to invest in the holding company as opposed to their listed underlying holdings directly, thereby acting as a force to narrow the discount. At 62% we believe the current discount to be unjustifiably wide, with the prospects of strong discount returns from such a level.

Contributors / Detractors (in GBP)

Link Company Matters Limited

Corporate Secretary

18 May 2022

LEI: 213800QUODCLWWRVI968

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