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.

Analyst's 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…
13 Jul 2024 Ch-ch-ch-changes
Politics isn’t the only place where there are big changes at the top, but for shareholders change is often a good thing…
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…
12 Apr 2024 Inflationary trends
A higher US CPI print is indicative of lurking inflationary trends...
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 ordinary investors a cost-effective solution to 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…
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...
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...
25 Jul 2018 Fund Analysis
This well known global generalist has had a tough run in recent months but a higher active share could prove interesting...
13 Mar 2018 Fund Analysis
Witan is one of the UK’s largest investment trusts and aims for capital growth and an income which rises faster than inflation using a multi-manager approach...
14 Dec 2017 Race to the bottom
How are investment trust boards doing, in bringing down their costs?
16 Aug 2017 Fund Analysis
A global equity trust run via a manager of managers approach that has delivered consistent outperformance over the medium term...
View all

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