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
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Overview

Witan aims to provide investors with a ‘one-stop shop’ for an actively managed exposure to global equities. The trust invests with a range of third-party managers who select concentrated portfolios. This approach means that shareholders can benefit from diversification and active management, but with less key-man or manager risk.

The selection of these managers is overseen by Witan’s executive team. These underlying managers run high conviction portfolios, which means that the trust’s overall exposure may be quite different from its benchmark. Managers employ different strategies, with some being highly adaptable, to minimise the need to change them over time. However 2020 has been challenging for investors, and the executive team have made an unusually high number of changes to the portfolio.

These changes represent around a third of the portfolio, and represent the first substantial changes since 2017. Overall these changes significantly reduce the trust’s exposure to ‘value’, while increasing the exposure – and reducing the underweight relative to the benchmark – to the US. It also represents a change in thinking: that global portfolios, rather than geographic specialists, are now more likely to deliver the best results going forward.

Witan employs structural gearing, historically at around 10% of NAV. Over the last six months Witan has been making adjustments to bring interest costs down and increase flexibility. The current gearing at 9% reflects the relatively cautious optimism of the team.

At the current share price, Witan yields 3% and has increased its dividend every consecutive year for 45 years. The board notes that revenue earnings per share in 2020 are likely to be around half of the 2019 level, but that they expect to use reserves so that shareholders will see continued dividend growth in 2020.

Analyst's View

Witan has a strong track record against global equities since it adopted a manager of managers approach. However 2020 has been a poor year so far for Witan. Our analysis shows that the underperformance was very much concentrated in Q1 and represents a number of one-off factors – see Performance. Since then the NAV has seen marginal outperformance of the benchmark, giving grounds for optimism. The board and executive team have made some decisive changes, designed to set the trust back on track towards outperformance once again – as examined in Portfolio.

Currently Witan trades at a discount of 7.8%, which is wider than the one year average of 4.4% and the sector weighted average discount currently of 2.9%. Should the trust regain its poise in performance terms, as we discuss under Discount, there is potential for the discount to narrow once again.

In the current uncertain outlook for dividend income, the board’s statement on Witan’s dividend is reassuring. At 3%, based on last year’s dividend level, it will likely prove attractive relative to many other income stocks.

For us Witan continues to be one of the more attractive investment vehicles for long-term investors, searching for an actively managed equity global portfolio for both capital appreciation and income. The board remain engaged in protecting discount volatility on the downside. Furthermore, with net assets of £1.7bn, Witan is a long way from being constrained in how many shares it is able to buy back. Yet the current discount remains wider than historic averages and could prove to be an opportune entry point.

bull bear
Manager of managers approach means that investors can benefit from a diversified array of concentrated portfolios Witan may lack appeal for investors who want to do their own asset allocation
Refreshed roster of managers, with an increasingly global approach Poor performance so far in 2020
A reliable dividend, progressively growing for the past 45 years Gearing can exacerbate the downside
Continue to Portfolio

Fund History

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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