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
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Overview

Alliance Trust (ATST) follows a well-diversified approach to global equity investing, while still retaining the benefits of active management. ATST’s management has been delegated to Willis Towers Watson (WTW), the global investment consultancy. WTW brings with it a huge depth of resources, whereby 4,000 researched equity long only asset managers are condensed into a list of 20 potential managers, those which WTW deems to be both best in class and skilled at managing concentrated portfolios. For ATST’s portfolio, WTW currently utilises 10 of these managers blended with complementary styles in such a way as to diversify away the vast majority of factor, sector and regional risks relative to benchmark while still retaining the benefits of active management, as demonstrated by the trust’s high active share.

ATST’s portfolio is a unique combination of managers, as each manager invests in a customised portfolio of highest-conviction stocks, as opposed to replicating an existing strategy. ATST offers retail investors one of the few ways they can access some of the underlying managers, given their services are often not available to UK investors. Likewise, WTW’s advisory investment services are also typically reserved for large professional clients.

ATST’s long-term performance has kept pace with global markets, while its performance over the last 12 months has been strong, with the trust outperforming both its benchmark and peers. We cover this in more detail in our Performance section. ATST also has one of the longest track records of dividend increases of any investment trust. Shareholders have recently voted to approve a change in its reserve structure, which may lead to a potential dividend cover of 19x, providing it with enormous support for future dividend payments.

Kepler View

ATST offers clients a singular solution to global equity investing, providing them with a diversified exposure to global equity markets while preserving the benefits of active management. We believe ATST could be used to replace a passive exposure to global equities (given the trust’s near-identical factor and regional exposures), or for an investor who wishes to add potential alpha to their pre-existing allocation.

We believe that retail investors may find additional attractions in ATST. These include the unique exposures that ATST provides, given its use of managers which are not typically available. The trust also gives investors access to the investment capabilities of WTW for the complex task of manager assessment and monitoring along with risk management and portfolio construction, making ATST a ‘fire and forget’ style of investment.

While recent markets have not suited active stock-picking, given the concentration of returns around mega-cap and growth stocks and strong market momentum since 2019, we believe ATST’s competitive returns are encouraging given WTW actively seeks to diversify away from such exposures. Thankfully, as said momentum dissipates, active management can return to prominence as stock-specific factors begin to dominate, something we have already begun to see in ATST’s recent 12-month outperformance.

While ATST’s discount has been largely consistent since WTW took over, the advent of a stock-picking-friendly market could be the catalyst for further outperformance, which may in turn lead to a narrowing of the discount.

Bull
Bear
Only way to access certain underlying managers
Can underperform in trend-driven markets
Post-COVID-19 markets may be more suitable for active stock-picking
Gearing can amplify losses on the downside
Potentially huge revenue reserve to support the dividend
Relatively low yield may be unattractive to income investors
Continue to Portfolio

Fund History

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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