Fund Profile


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Alliance Trust. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

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Alliance Trust (ATST) is one of the UK’s oldest and largest investment trusts and has delivered a growing dividend to shareholders every year over the last 52 years.

In 2017, the trust changed its spots dramatically, adopting an innovative portfolio management approach that uses eight managers, each tasked with managing a bespoke highly-concentrated portfolio, selected and overseen by Willis Towers Watson (WTW). WTW chooses a line-up of stock pickers that has similar characteristics to the MSCI ACWI benchmark, in terms of style, country and sector exposures, to ensure that performance is primarily driven by stock selection in the long run. As such, and with net assets of c.£2.7bn, ATST is a truly ‘global’ trust.

Having had nearly two years in the new form, the equity portfolio has generated a decent return during what could be considered a difficult global market for active stock selection. The equity portfolio has risen by 10.4% since the start of April 2017 to January 2019, outperforming the MSCI ACWI index by almost 1.6%. Relative performance was somewhat hindered over 2018, as we saw a much smaller than usual number of (large cap) companies outperform the index during the first nine months of the year and a strong, broad-based market correction in the final quarter.

ATST’s discount narrowed significantly on the announcement of the change in strategy in January 2017 and the board continues to manage the discount where necessary. Over 2018 the trust traded on an average discount of 6% and this has since come in to the current discount of 4.9%.

William Sobczak
William joined Kepler Partners in February 2018 as an investment trust analyst. Prior to joining, William graduated from the University of Western Australia, with a BSc in Psychology.
Kepler View

The early signs from the changes the board made in 2017 are good. In terms of performance, in NAV terms the trust has outperformed relative to the benchmark and sits within the middle of the pack in comparison to its AIC Global peer group. Although the trust marginally underperformed the benchmark in 2018, we understand that this was a challenging period for active stock selection. WTW make the point that thanks to their approach, it would always be difficult for the trust to outperform the benchmark in a period like the first 9 months of 2018 when the majority of stocks in the index underperformed.

As we saw towards the latter end of 2018, volatility is making a comeback. This can create some shorter-term mispricing and therefore, an environment ripe for stock pickers that focus on long-term fundamentals is beginning to emerge. We see Alliance Trust and their eight ‘best ideas’ stock pickers as a vehicle well-positioned to take advantage of this. By putting eight portfolios together, Alliance Trust shareholders benefit from all the advantages of concentrated portfolios, but with very little of the extra risk that such an approach necessarily engenders when applied by a single manager. Manager diversification means that there is no key man risk and means that the trust should be able to produce an outperformance of the benchmark long into the future.

Alongside this, the board’s clear commitment to tackling the discount, means a return to a double-digit discount is extremely unlikely (although not impossible). Having witnessed the reversal of fortunes at Witan under a ‘manager of managers’ approach we would not rule out the trust moving to a premium, in time, should the new managers deliver a long enough period of strong performance.

Differentiated multi-manager approach, providing access to stock pickers not available to "retail" investors before
Relatively short performance track record in the public sphere, though mitigated by WTW experience
Benefits from scale to bring institutional product and fees to a “retail” audience
No definable “style” to overall portfolio
Potential upside to discount, once track record more fully established

William Sobczak
William joined Kepler Partners in February 2018 as an investment trust analyst. Prior to joining, William graduated from the University of Western Australia, with a BSc in Psychology.
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Fund History

28 Jul 2022 Results analysis: Alliance Trust
ATST’s half year results have demonstrated the benefits of its highly diversified approach to active management…
15 Jun 2022 Staying active
We highlight several alternatives to passive investments for investors looking for core exposure in uncertain markets...
18 May 2022 Riding out the storm
We look at trusts with tightly governed discounts which may appeal to investors in volatile markets…
30 Mar 2022 You say tomato…
Do it yourself or put it into a global fund and leave it to the experts - our analyst debate the merits of each approach...
17 Mar 2022 It's the end of the world as we know it
We examine five potential themes for investors seeking long-term returns in a troubled and uncertain world...
02 Mar 2022 Spread 'em!
We explore how much dispersion in returns of stocks drive the differing fortunes of trusts…
28 Feb 2022 Results analysis: Alliance Trust
ATST’s latest results indicate that despite stylistic headwinds it has still generated a competitive NAV return, and now trades on an attractive discount…
21 Dec 2021 Fund Analysis
ATST offers investors a ‘core’ equity exposure, utilising seldom-found managers and having recently upgraded its dividend…
01 Dec 2021 Slides and Audio: Alliance Trust
Our research team at Kepler Trust Intelligence hosted a 45 minute webinar update with Willis Towers Watson, the managers of Alliance Trust...
03 Nov 2021 Don't fear the reaper
With market direction hard to call, we consider the case for taking a long-term view in the investment trust sector…
20 Oct 2021 Board games
Investment trust boards talk a good game about championing shareholders interests - but do they really deliver?
15 Oct 2021 Stock-picking global trusts are on a roll – and look cheap
Despite their balanced approaches, ATST and BUT rank as the first and third performing global equity strategies this year….
19 Aug 2021 Pandemic immunity
We ask which global equity trusts have outperformed through the different stages of the pandemic…
23 Jul 2021 Results analysis: Alliance Trust
Alliance Trust released a strong set of interim results this morning showing strong NAV growth driven by stockpicking, but the trust’s discount remains wider than the peer group average…
26 May 2021 Fund Analysis
ATST offers investors access to Willis Towers Watson’s exclusive multi-manager portfolio, which has generated strong returns over the last 12 months…
04 Mar 2021 Results analysis: Alliance Trust
ATST’s unique blend of stockpicking managers has delivered solid absolute returns against a volatile backdrop and extended its impressive dividend track record once again…
16 Dec 2020 My haven’t you grown!
How sustainability has gone from zero to hero in 2020…
27 Nov 2020 Fund Analysis
ATST offers a blended portfolio of nine highly concentrated funds...
05 Jun 2020 Deep impact
Audio and presentations from our conference this week, where fifteen of the world's best fund managers described a profoundly altered investment landscape...
13 May 2020 Braving the new world
Join 15 of the UK's best known fund managers at the Kepler Trust Intelligence Virtual Summit to find out how they see the world after the pandemic...
16 Jan 2020 Fund Analysis
ATST offers exposure to some of the world’s best fund managers via a low cost manager of managers approach…
10 Apr 2019 Because they're worth it
With the rise of the passives putting more pressure on fees than ever before, we argue that performance fees could be the key to encouraging truly active investment trust managers...
25 Mar 2019 Race ready
Clare Dobie explains how the board upon which she sits set about transforming the once sluggish Alliance Trust into a sleek hulled racing clipper...
27 Feb 2019 A marathon not a sprint
Our research shows that investment trusts' structural advantages give them a significant edge for investors seeking long term capital growth...
27 Feb 2019 Fund Analysis
After changing its spots in 2017, Alliance Trust continues to deliver a growing dividend and attractive returns...
09 Jul 2018 Go big or go home
The overwhelming evidence is that fund managers who are willing to back their convictions with punchy bets are the ones that tend to outperform by the highest margin...
04 Jul 2018 Fund Analysis
Alliance Trust has changed its spots dramatically, adopting an interesting portfolio management approach that uses 8 sub-managers, each tasked with managing a highly concentrated portfolio...
12 Oct 2017 Fund Analysis
We revist the revamped global equities giant as it approaches the first anniversary of its new, multimanager approach...
25 Jan 2017 Happy new year?
We collate the views of the City's top investment trust analysts, examining their reviews of 2016, and highlighting their predictions for the year ahead...
25 Jan 2017 Word on the street
Sell-side analysts comment on Alliance Trust's strategic review and plans for a new manager of managers approach...
16 Jan 2017 Fund Analysis
A new chapter and an exciting future...
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