Improved UK performance benefits overlooked Brunner

It's a co-managed fund divided into two parts - separately dedicated to UK and global exposure, but with a low allocation to emerging markets (1 per cent Latin America and 7 per cent Asia Pacific). Looking after the global side of the portfolio is Lucy MacDonald, the CIO of Global Equities with 20 years of experience in equity investment. And in charge of the UK side is Jeremy Thomas, who has 17 years of experience.

It has produced an impressive 25.43 per cent total share price return this year to date, which is well above its sector average - and is producing a 2.81 per cent yield which is on track to have risen around 8 per cent by the end of 2013. Over three years to 20 September 2013, it has thumped its sector average with a 46.78 per cent return, but over five years to the same date, it has under-performed the sector average with a 47.63 per cent return.

Investors Chronicle hasn't paid much attention to this trust before. It's UK half has historically let it down, but it's been doing much better recently since Jeremy Thomas took over the management 18 months ago. In the past, the trust been very cautious when it came to financial stocks, but over the last 12 months it has received a welcome boost from a selection of mid-cap financial stocks such as Resolution, ICap and Tullet Prebon. And Mr Thomas is considering upping exposure to UK financial stocks - and even eyeing up the banks as a potential investment for the year ahead.

The strategy is best described as bottom-up stock-picking with a grassroots research facility. It employs an 11-strong research team which filters down to 300 investigators, with 50,000 industry contacts all over the world - talking to everyone with a relationship with potential stocks, from customers to manufacturers.

Ms MacDonald looks for companies producing topline growth, and Biotech is her favourite sector. US drug maker Celgene has been the best performing company in the entire fund this year, and she's still holding it, but has recently trimmed her exposure to it.

She's also keen on internet stocks - particularly in the foreign travel sector as she has spotted an opportunity for expansion. A whopping 60 per cent of all travel in the US is booked online, compared to 40 per cent in Europe and just 20 per cent in Asia - presenting two areas of obvious under-penetration in the global market. She likes Priceline, which owns the well-known website, booking.com.

If you like the look of Brunner Investment Trust, now's a good time to get in, according to Iain Scouller, head of the investment funds team at Oriel Securities. For a start, it's trading on a wide 14 per cent discount which makes it look attractive. And then there's the equity leverage. Since 1987, it has been repaying debts (having issued coupons with an 11.125 per cent repayment rate that mature in 2018). And in 1993, it issued more coupons with 9.25 per cent repayment that mature in 2023. But as these unwind, Mr Scouller says it will result in a 25 per cent gain in NAV, benefiting investors who get in now while the discount is still wide.

For investors nervous about taking risk, the fact that Ms MacDonald has majority of her pension invested in the fund should be of some comfort. The fund's total expense ratio of 0.81 per cent is also well below the sector average of 1.03 per cent, which is encouraging. Things are looking up for this previously overlooked fund. Buy.

BRUNNER INVESTMENT TRUST (BUT)