Fund Profile

Disclaimer

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.

Overview
ATST offers investors a ‘core’ equity exposure, utilising seldom-found managers and having recently upgraded its dividend…
Overview

Alliance Trust (ATST) follows a multi-manager approach to global equity investing, with the board having delegated the management of ATST to Willis Towers Watson (WTW), the global consultancy firm. The Alliance Trust Investment Committee team of Craig Baker, Stuart Gray and Mark Davis at WTW select a suite of managers from a long list identified by their manager research team.

As discussed under Portfolio, ATST’s underlying managers have very distinct styles. Each manager is asked to run a concentrated portfolio of their highest-conviction ideas, with the WTW team then weighting the managers in a way that ensures ATST’s factor risks do not deviate from those of its benchmark, the MSCI ACWI. The central idea behind this strategy is that over the long-run fundamentals should drive performance, even if they can be drowned out by noise in the short-term.

For much of the pandemic period, this balanced approach has been struggling against a market seeing strong stylistic outperformance. ATST’s underlying equity managers’ performance (a metric which removes the effect of underperforming legacy assets) was ahead of the benchmark until November, which saw a sharp correction in markets due to the emergence of the omnicron variant (which will hopefully be shortlived) as we discuss in the Performance section.

In the current year one of the most substantial changes to ATST has been a positive resetting of its Dividend. The board has proposed to substantially increase this, rebasing the dividend upwards to 5.825p a quarter. Annualising this payout, the trust offers a dividend yield of 2.3% on an ongoing basis. ATST has a track record of 54 years of consecutive dividend increases, with the board committed to continuing this record even at the higher level. ATST currently trades on a 7.4% discount, in line with its long-term average.

Kepler View

ATST, in our view, is a good example of a ‘core’ equity holding. This is not merely due to its on-benchmark risk profile, but also due to its ability to preserve the benefits of active management at the same time. ATST is often the only way that retail investors can access the services of the underlying specialist managers, as they seldom market their services to UK retail investors.

Additionally, ATST offers an enviable track record of dividend growth, and the higher payout should make the yield even more attractive. In a similar manner, ATST’s ESG characteristics remain superior to those of its benchmark, with the board’s clear commitment to ensuring ESG remains a core part of the strategy being an attractive feature. We believe ATST would also serve as a strong alternative to passive equity exposures, as it would not materially alter an investor’s risk profile while still retaining the potential for added alpha; alternatively, it may suit investors looking for a simple solution to broad equity market exposure.

During the pandemic, markets have been dominated by style, with growth outperforming substantially for long periods and a sharp snap-back for value in the middle. These movements have been unpredictable, based on developments in the pandemic rather than anything economic. The benefit of ATST’s approach is that the management team aren’t asked to predict these unpredictable moves. During strong trending markets this style will underperform, but it is over the long run that it needs to be judged.

bull bear
Offers exposure to specialist managers not available elsewhere
May underperform in momentum-driven markets
Forthcoming dividend increase will lead to a higher future yield
Gearing can amplify losses on the downside
Attractive characteristics for a ‘core’ equity allocation
Resurgence of pandemic may not suit balanced approach in the short term
Continue to Portfolio

Fund History

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...
View all

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