Witan 19 July 2023

Witan Investment Trust (LON:WTAN) is a simple-to-understand one-stop shop for investors wanting an intelligently put-together global equity exposure. By allocating to a range of different managers, WTAN’s in-house executive team look to provide an all-weather exposure, capable of good performance through the cycle. For some time now, WTAN has been managed with a strong emphasis on responsible investment (see ESG section).

Underlying investment decisions for WTAN are taken by a roster of third-party investment managers (see Portfolio section), each running a segregated account. This enables continuous dialogue with underlying managers, enabling the executive team to monitor performance, not to mention progress towards WTAN being 100%-invested in sustainable businesses by 2030 or earlier. The executive team aim for WTAN to be a long-term partner for managers, but the team do trim or add to allocations or, less often, make wholesale changes.

Within the core manager line-up, WTAN has 10% (+/-5%) invested in UK managers, reflecting the UK bias of WTAN’s retail investors. WTAN’s benchmark is a composite of 85% of the MSCI ACWI Index and 15% of the MSCI UK Investable Market Index. This differs from WTAN’s multi-manager investment trust peers, which have purely global equity benchmarks. Approximately 25% of the portfolio is invested within the specialist managers and strategies, aiming to add to risk-adjusted returns through superior and often uncorrelated returns. When combined, WTAN’s portfolio is highly diversified and the active share is high, standing at 79%, as at 30/06/2023.

Investors in WTAN should expect the trust to be geared, with 10% seen as a neutral level. WTAN has now delivered 48 years of consecutive dividend increases. This puts it firmly amongst the leaders of the AIC’s ‘Dividend Heroes’ and the shares yield 2.6%.

WTAN’s in-house executive team is aligned fully with shareholders and their considered and thoughtful approach to allocating capital is exemplified by their approach to sustainable investing (see ESG section). That said, a high active share means that the portfolio can behave very differently to the benchmark and peers, and the NAV may well underperform at times. Whilst WTAN has outperformed over one and three years, it has struggled over a five-year period thanks to several one-off factors (see Performance section) that have hindered relative performance against benchmarks. That said, the comparison with the AIC Global peer group is perhaps more indicative. On this basis, WTAN’s NAV has delivered a reasonable degree of outperformance of the peer group’s weighted average return.

Gearing and WTAN’s unique portfolio set-up tends to expose investors to slightly higher volatility than global equities’ ETFs. The trust’s underperformance during 2022 does not, in our view, signify any fundamental issues with Witan’s process or manager line-up, and the NAV performance so far during 2023 gives cause for optimism. As such, for investors willing to take a long-term view, WTAN represents a unique one-stop shop for global equity investors and the discount of 9.2% is considerably wider than the five-year average of 5.8%. With the board remaining committed to reducing the discount over time, evidenced by buyback activity continuing, investors may see the current discount as an opportunity.