The trust looks for others on deep discounts, facing continuation votes or investing in extremely unloved areas of the market.
It aims to squeeze performance out of narrowing discounts and to limit the downside by buying extremely cheap assets.
The result is a portfolio that displays low volatility, low correlation to equities and steady returns – a truly contrarian strategy. Tepes says that there is the potential for even better in the long run.
"Miton Worldwide Growth Trust provides exposure to a portfolio of predominantly less liquid, deep-value funds that most investors will find it difficult to trade," she said.
"The trust tends to lag in strongly rising markets but has the potential to perform strongly as sentiment recovers and discounts narrow, in our view."
The manager, Nick Greenwood, is concentrating on themes that are out of favour, which means looking for past income and defensive attributes, both of which investors are paying a premium for and which will limit returns if prices to NAV start to narrow as economic confidence returns.
Instead, he is buying into illiquidity risk and emerging markets, two themes that investors are averse to and that are available on deep discounts, meaning the portfolio could do very well in a recovery market, Tepes says.
The £37.4m trust is on a discount of 11.8 per cent, according to the AIC, and given that it buys funds on deep discounts, investors get a "double discount" effect that amounts to around 40 per cent to NAV, Tepes calculates. It also offers a low volatility to UK equities, which could appeal to investors looking to diversify.
Over three years it shows a correlation of 0.6 to the FTSE All Share compared with the 0.95 of the average Global Growth trust. Over five years the figures are 0.64 and 0.95.
Over three years it has underperformed the sector, however, making 24.15 per cent while the average Global Growth trust has risen 29.62 per cent. It has modest aims in terms of returns, however, focusing on beating cash.
It has done this with significantly less volatility, suggesting that buying trusts on a deep discount limits risk.
Performance of trust vs sector and benchmark over 3yrs
Source: FE Analytics
Over three and five years it has the third-lowest volatility of the 33 trusts in the sector, while its maximum drawdown – the most investors could have lost if they had bought and sold at the worst times – is also below average.
The portfolio contains some relatively mainstream trusts in out-of-favour sectors, such as TR European Growth Trust, JP Morgan Japanese and Baker Steel Resources.
TR European Growth is a small cap European trust trading on a discount of 13.3 per cent. While the European market has done well over the past year and a half, smaller companies trusts have yet to re-rate and remain on wide discounts.
Despite NAV gains of 42.9 per cent over the past year and share price returns of 53.56 per cent, TR European Growth Trust remains on a wide discount.
Performance of trust vs benchmark over 1yr
Source: FE Analytics
Japan is another market to have done well in recent months, but JP Morgan Japanese remains on a discount of 8.8 per cent.
Baker Steel Resources invests in the out-of-favour commodities sector and is on a huge discount to NAV of 35.2 per cent.
However, what sets Miton Worldwide Growth apart is its holdings in much less well-known areas and in special situations where the manager believes that value has been severely underestimated.
For example, the trust holds the Phaunos Timber fund, which is trading on a discount of 43.2 per cent after launching into the US housing crash in 2006 and losing 43.59 per cent in share price terms since then.
Performance of trust since Dec 2006
Source: FE Analytics
As that market recovers, there is scope for the discount to narrow, the manager believes, while a new chairman is resolving corporate governance issues.
The manager also holds trusts that are in their realisation phase, such as the RENN Universal trust, which is trading on a discount of 27.6 per cent and was wound up following a shareholder vote in April.
Cambium Timber, on a 36.4 per cent discount, is in realisation mode, with investors being lobbied to draw that process out to get a better price.
The trust also holds Origo Partners, a trust that owns mining assets in Mongolia and is sitting on a huge discount of 66.2 per cent.
Impax Environmental Markets has moved on to a 10.7 per cent discount as environmental spending was de-prioritised after the credit crunch; the manager believes it will recover when the economy improves.
The trust has a number of holdings in funds that invest in property in out of favour areas. Macau Property Opportunities is trading on a 16.1 per cent discount and Pacific Alliance China Land on a 28.6 per cent discount.
Aseana Properties, which invests in Malaysian and Vietnamese property, is on a discount of 43.7 per cent.
There are a number of private equity holdings too, including JP Morgan Private Equity, which is likely to be wound up by 2017, Private Equity Investor, which is being wound up, and Graphite Enterprise, still on a 21.5 per cent discount despite a solid long-term track record.
In total there are around 50 holdings in the trust, which has 71.7 per cent in equities, 14.5 per cent in property funds and 7.7 per cent in fixed interest.
The fee is 0.5 per cent of the market cap of the trust, and there is a performance charge of 15 per cent of NAV total return. Ongoing charges were 1.31 per cent in the year to the end of April.
However, there is a high water mark, meaning that the fee will not be charged unless the NAV value reaches its previous highest point of 210p a share – which would represent a 50 per cent share price rise from present levels.
