Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Witan. 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
Business as usual for WTAN’s executive team, while the board reviews investment management arrangements…
Overview

Witan (WTAN) has employed a multi-manager approach since 2004. In doing so, it offers a simple-to-understand and diversified strategy for investors wanting an intelligently put-together global equity exposure. Since 2010, WTAN’s investment allocations have been led by Andrew Bell and the executive team. Andrew has recently announced his retirement from the CEO role in the coming year, and WTAN’s board has stated that it will be formally reviewing the options for investment management arrangements. In the meantime, it is very much business as usual for the team.

WTAN has carved a name out for itself as a strongly independent investment trust, which appeals to private investors seeking to benefit from the trust’s significant economies of scale and the ‘collective wisdom’ of the board and investment managers working for it. Notably, WTAN has built up a 49-year track record of unbroken dividend increases (see Dividend), which forms part of the appeal of the trust. For some time now, WTAN has been managed with a strong emphasis on responsible investment (see ESG section). We don’t see any material change in direction for Witan’s global equity objective, although clearly, we can anticipate some change in how WTAN’s capital is invested following the board’s review. We look forward to hearing more from the board on the results of their deliberations.

2023 proved to be a challenging year for WTAN in relative performance terms, and whilst there were no individual management changes, the executive team have increased the portfolio’s overall exposure to growth managers. They also added to the GMO Climate Change Fund in Q4 following weakness earlier in the year. The investment trusts held within the portfolio saw discounts widen significantly, with many now trading on discounts in excess of 30%. WTAN’s discount is in-line with peers in the AIC Global peer group. The board continues to buy shares back.

Kepler View

Given the high active share of the roster of managers, and the unique way in which some capital is invested by WTAN’s executive team, the portfolio can be expected to behave differently to the benchmark and its peers. Additionally, as we discuss in Gearing, given that borrowings of 10% of NAV are seen as a neutral level, investors should be aware that this will add to volatility.

As illustrated in the Performance section, the trust’s underperformance over the past five years is chiefly down to two relatively short periods in H1 2020 and H1 2022. That said, the specific market conditions of 2023 did not help on a relative basis. With WTAN’s discount at 9%, the board appears committed to protecting and reducing the discount over time, as evidenced by buy-back activity continuing, and WTAN’s 49 years of consecutive dividend increases puts it firmly amongst the leaders of the AIC’s ‘Dividend Heroes’. WTAN’s dividend resilience is part of the attraction for long-term investors, with the board supporting the dividend with revenue reserves since 2020 while dividend cover continues to improve.

In our view, with the retirement of Andrew Bell as CEO, there is a clear opportunity for the Witan proposition to be refined, whilst retaining WTAN’s status as an attractive long-term savings vehicle. If the board can capture investors’ imagination, this should increase demand for shares, and we might plausibly start to see the discount narrowing in once again, especially if sentiment towards equities starts to improve.

Bull

  • Unique approach offers diversified exposure within a clear portfolio structure
  • Discount suggests waning demand for the shares, but board currently reviewing investment management arrangements could see a rekindling in appetites for the trust
  • A reliable dividend, progressively growing for the past 49 years

Bear

  • Structurally higher exposure to UK than many global peers means relative performance may differ
  • Poor performance in two key periods (H1 2020 and H1 2022) means long-term track record has been affected
  • Gearing can exacerbate the downside
Continue to Portfolio

Fund History

17 Jul 2024 Balancing act
We ask why trusts with a more flexible approach have outperformed…
10 Jul 2024 Things can only get better
Discounts are yawning but markets are thawing and boards are on the offensive; Labour might not be the only thing making a comeback this year...
05 Jul 2024 Flash update: Alliance Trust
Thoughts on Witan’s proposed merger with Alliance Trust…
04 Jul 2024 Flash update: Witan
Thoughts on Witan’s proposed merger with Alliance Trust…
03 Jul 2024 Monthly roundup: merger news and highlights from our June small cap event
Jo and Ryan discuss the latest news, reviews and interviews in the investment trust world...
24 Apr 2024 Fund Analysis
Business as usual for WTAN’s executive team, while the board reviews investment management arrangements…
17 Apr 2024 Pretty, pretty, pretty good
Do investment trusts really protect capital and income against inflation? Let's take a look…
19 Jul 2023 Fund Analysis
2023 has, so far, seen a return to outperformance, but the discount remains wide by historical standards…
12 Jul 2023 Many hands make light work
We break down how multi-managers have performed over the past five years and their positioning for the inevitable uncertainty that lies ahead…
30 Dec 2022 Fund Analysis
Short-term challenges do nothing to dim the long-term prospects for Witan…
17 Aug 2022 The world for sale
While investment trusts are lagging their open-ended cousins in the global sector, their discounts may provide an attractive entry point...
03 Aug 2022 Fund Analysis
WTAN’s differentiated approach remains attractive despite short term performance challenges…
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...
08 Dec 2021 Fund Analysis
Witan continues to adapt to a changing investment environment...
19 Aug 2021 Pandemic immunity
We ask which global equity trusts have outperformed through the different stages of the pandemic…
16 Jun 2021 A better class of travel*
Sharing many features of a traditional family office, investment trusts offer a sophisticated, cost effective solution for managing family wealth...
09 Jun 2021 Fund Analysis
A solid period of outperformance means WTAN is back in business...
16 Dec 2020 Fund Analysis
Witan has bounced back from Q1 2020, making the 7.6% discount potentially attractive…
07 Sep 2020 Fund Analysis
WTAN has had a challenging 2020, but a refreshed line-up of managers makes the 7.8% discount potentially attractive…
03 Dec 2019 Fund Analysis
Highly active multi-manager approach offering a ‘one-stop shop’ for capital appreciation and income…
23 Oct 2019 Sail away: the best trusts to escape the UK
We look under the hoods of Global sector trusts to see which offer the best diversification prospects for UK investors...
15 Apr 2019 Fund Analysis
Witan follows a highly active ‘manager of managers’ approach, using a range of third-party managers to gain exposure to global equity markets...
26 Jul 2018 Fund Analysis
This well known global generalist has been hurt by its UK exposure this year as the Brexit debacle trundles on...
25 Jul 2018 The Endurance Growth Portfolio
The purpose of the Endurance Growth Portfolio is to generate long-term capital growth with a bias towards quality and defensive characteristics...
14 Dec 2017 Race to the bottom
Ahead of the new PRIIPS rules we examine the progress investment trust boards are making in reducing costs...
24 May 2017 Fund Analysis
12 Jul 2016 Fund Analysis
12 Jul 2016 Taking the bull by the horns
We examine the boards which have done most to fight for their shareholders' interests in an unforgiving arena...
12 Jul 2016 Anarchy in the UK
We collate the reactions of the City's leading investment companies analysts in the wake of the EU referendum...
20 Apr 2016 A wild ride for Endurance Growth
Our long term growth model portfolio has had a white knuckle ride since launch in July...
19 Apr 2016 Fund Analysis
19 Apr 2016 Brexit discount slump is a buying opportunity
Analysts believe a sharp bounce is likely if the public comes down in favour of a 'remain' vote.
15 Mar 2016 First class trusts at knockout discounts
A fire-sale by a fund of investment trusts dumping assets worth more than £650m is good news for discount hunters...
13 Oct 2015 Analyst
Our roundup of the experts' views sees light at the end of the mineshaft for BlackRock World Mining, and a return to form for Harry Nimmo...
07 Sep 2015 RIT Cap stands out amid market chaos
RIT Capital, the most risk averse member of The Endurance Growth Portfolio, has eked out a positive return against a backdrop of plunging markets this summer
07 Jul 2015 Fund Analysis
10 Jun 2015 The Endurance Growth Portfolio
Five investment trusts with outstanding long-term growth prospects
View all

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