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) is one of the largest investment trusts in the market, with gross assets of c. £3bn. As shown in the Performance section, since Willis Tower Watson (WTW) took over management in April 2017 would observe that performance has improved.

WTW employs a manager-of-managers strategy, giving each of the underlying managers the mandate to create a ‘best ideas’ portfolio of around 20 stocks with few restrictions. It was announced in September that Lomas would replace First Pacific Advisors (FPA), as we discuss under the Portfolio section. With this change in mind, WTW has continued to manage the allocations between managers to ensure performance is driven primarily by stock selection, rather than by sector, style or country weighting. The team hope to generate the levels of alpha associated with concentrated portfolios without the risk of a single portfolio.

Alongside capital appreciation, ATST currently offers a yield of 1.7% and is considered a ‘dividend hero’ by the Association of Investment Companies (AIC). The trust has an exceptional dividend growth track record, having increased its payout every year for the past 53 years. ATST’s board has proposed a vote at the next AGM to make the merger fund distributable. If this is vote is passed, based on current figures we estimate this would cover the most recent dividend close to 16x. Current revenue reserves offer c. 2.35x cover the FY 2019 dividend. In 2020, the board introduced a Dividend Reinvestment Plan. This offers investors a considerably more cost-effective approach to reinvesting dividends and has several long-term benefits, as discussed in the Dividend section.

Currently, the trust trades at a discount of 4.3%, marginally wider than the sector’s weighted average of 4%.

An update from Alliance Trust’s Investment Committee

Analyst's View

The unpredictable conditions caused by Covid-19 have illustrated the difficulties of being an active fund selector. The pandemic has unleashed volatility, sharp changes in market direction, and huge disparities in returns between country and sector. ATST offers a skilled, experienced management team with the resources to operate in such an environment. Additionally, the WTW team’s disciplined approach to building a benchmark and managing exposures carefully should ensure the trust is not overexposed to any one factor or macroeconomic outcome – a crucial potential advantage in a time of so much uncertainty.

We believe the volatile markets seen over the first 10 months of 2020 are likely to continue for the foreseeable future, and ATST is a trust with the ability to benefit from this. The blend of growth and value managers under the same umbrella creates a fund with the potential to outperform, regardless of the popularity of any particular investment style. WTW seeks to avoid the potential trap of overlapping holdings by selecting managers with a range of complementary approaches, which means they should naturally avoid each other’s holdings.

While the income generated by the fund is not massive, for long-term shareholders the compound effect of this income being reinvested could be significant. The consistency with which the dividend has been paid, over 53 years, on a progressive basis whilst currently supported by very large reserves is an additional point in its favour.

Bull bear
Blend of management styles means it can perform strongly across market conditions Gearing can increase the trust’s volatility
Proactive broad buybacks Could struggle if we continue to see the outperformance of a small number of mega-cap stocks
Relatively low fees for a multi-manager fund
Despite an excellent record of dividend increases, the yield is low for income seekers


Continue to Portfolio

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...
27 May 2022 Hand it over to the professionals
Multi-manager trusts let ordinary people leave the hard work of asset allocation, portfolio construction and ongoing active management to expert investors…
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…
19 Jan 2022 A unique structure for dividend seekers
Alliance Trust is the only way ordinary UK private investors can get exposure to a select group of leading asset managers…
21 Dec 2021 Fund Analysis
ATST offers investors a ‘core’ equity exposure, utilising seldom-found managers and having recently upgraded its dividend…
08 Dec 2021 Five expert tips for choosing a fund manager
We asked the expert fund selectors at Willis Towers Watson what they look for when they’re trying to identify a winning fund…
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?
24 Aug 2021 Looks can be deceiving
Top-down portfolio characteristics can obscure the investment characteristics of a trust, particularly when it comes to multi-manager portfolios. Here, we examine how Alliance Trust maintains a high active share while still offering a diversified underlying portfolio…
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 results this morning showing strong NAV growth driven by stockpicking, but the trust’s discount remains wider than the peer group average…
10 Jun 2021 Time for the stock pickers
As a decade of growth-led momentum gives way to a choppy value resurgence, the outlook for markets is uncertain. Stock pickers like the team behind Alliance Trust are poised for their moment in the sun…
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…
24 Mar 2021 Keeping a level head: the balanced approach to investing
The recent rotation has put a spotlighted how quickly an investment style can fall in or out of favour. For many investors, timing the market is a challenge, which makes a truly active yet balanced approach appealing…
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...
29 Oct 2020 Alliance Trust: A standout trust for the uncertain times ahead
With ISA season quickly approaching, we look at a trust which can offer attractive returns in both bull and bear markets, and has a track record to prove it…
21 Sep 2020 Alliance Trust: more than meets the eye
Due to the high alpha approach, capital appreciation often gains the headlines, however ATST is also one of the most dependable income sources in the investment trust universe…
09 Sep 2020 No need for compromise
The volatility of global markets has illustrated how ‘all-in-one’ investment vehicles can be beneficial for investors. We look at ATST, which can offer diversification without compromising growth…
23 Jul 2020 Results analysis: Alliance Trust
The global growth giant holds income steady as COVID continues to batter dividends for investors…
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...
03 Apr 2020 Beware the risk: the other side of investing
Return is the focus of most investment discussion - but risk is a vital part of the investing equation too. We discuss Alliance Trust's approach to risk management...
11 Mar 2020 Lessons from the coronavirus: keep things simple when it comes to investment
With two major shocks hitting global markets so far in 2020, the case for a straightforward approach to investment has been thrown into relief...
06 Mar 2020 Results analysis: Alliance Trust
The once sleepy global equities giant released a strong set of annual results this morning, beating its benchmark, reducing its costs, and increasing its dividend for the 53rd consecutive year…
25 Feb 2020 First among equals
Multi-manager is a popular strategy, but some multi-manager funds are cut from a finer cloth…
16 Jan 2020 Fund Analysis
ATST offers exposure to some of the world’s best leading managers via a low cost manager of managers approach…
06 Nov 2019 Alliance Trust portfolio update
Willis Towers Watson CIO Craig Baker discusses the century old trust's 'go anywhere' investment strategy...
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...
15 Aug 2018 The income edge
Last year saw investment trusts soar in popularity among both retail investors and wealth managers. We examine why this has happened, as well as the structural advantages of investment trusts for income-hungry investors...
09 Jul 2018 Go big or go home
Our research suggests that fund managers who are willing to back their convictions with punchy bets tend to outperform over the long term...
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...
View all

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