Alice Rigby
View profile
Updated 28 Jul 2023
Save Article Download

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.

  • Alliance Trust (ATST) recorded strong absolute performance in the six months to 30/06/2023, achieving NAV total return of 11.1% versus a MSCI ACWI benchmark return of 7.8%. Sentiment weighed slightly on the share price meaning that shareholder total return lagged the benchmark by 0.2%, recording a return of 7.6% over the six months.
  • Performance remains well ahead of its peers, outperforming the AIC Global sector by 2.1% on an NAV basis.
  • The trust’s strong performance once again demonstrated the benefits of its balanced approach, as markets continued to experience volatility throughout the period .
  • ATST announced its second interim dividend of 2023 of 6.34p, meaning that total dividends for the half year sat at 12.52p, putting the trust on track for a 5% increase in annual dividends year-on-year.
  • The trust’s discount widened steadily over the period from c. 4% at the beginning of the year to c. 7% on 30/06/2023. However, it has narrowed since to 6.1% as at 26/07/2023 and has remained considerably narrower than those of its peers, thanks in part to proactive buyback activity by the board.
  • Longtime Chair of the trust, Gregor Stewart, will step down at the end of the year, to be replaced by existing board member Dean Buckley.

Kepler View

Alliance Trust (ATST) aims to offer a core investment solution, by utilizing a multi-manager approach to build a balanced portfolio of global equities, a process introduced in 2017 when the board appointed Willis Towers Watson to simplify and refine the trust’s investment process.

WTW focuses on offering a diversified exposure to global equities, balanced across different styles and factors, with the aim of achieving steady positive returns over the long term. To achieve this they employ a strategy previously reserved for institutional investors, blending 10-15 investment managers’ best ideas into an overall portfolio.

Each manager has a distinctive point of view, but blended together produce a balanced allocation to global equities, with active underlying management. Since the trust reached its half year, WTW has added a tenth strategy to the portfolio, Dalton Investments, which invests in undervalued Japanese companies largely at the small to mid-end of the market capitalisation spectrum. WTW explained that changing regulations in Japan combined with low inflation and interest rates means that it offers an interesting diversified exposure relative to the rest of the developed world.  

Six years on from inception the trust’s investment process is firmly bedded in, and has especially proved itself over a challenging three years for markets, during which the trust has outperformed its MSCI ACWI benchmark by 4.8% on an NAV total return basis to 30/06/2023 and by 4.2% on a total shareholder return basis.

Other aims for the trust include providing a gradually rising dividend and maintaining a relatively stable discount. In terms of the former goal, the trust has once again achieved this with aplomb, offering two interim dividends with a combined value of 12.52p in the first half of 2023. This puts ATST shareholders on track to see an annual dividend increase of at least 5% year-on-year should this payout rate be maintained across the third and fourth interim dividends as the board expects. This follows a bumper 26% increase in 2022 and reflects the board’s firm commitment to providing total returns for shareholders.

In terms of the latter goal, the board has been proactive, buying back shares equivalent to 1.9% of the shares in issue at the start of the period due to ongoing volatility in markets. While the trust’s discount has widened since the start of the year, from c. 4% to c. 7% at the half-year end, it has since narrowed to 6.1% as at 26/07/2023.

Login to read the full article...

Kepler Trust Intelligence provides research and information for professional and private investors. In order to ensure that we provide you with the right kind of content, and to ensure that the content we provide is compliant, you need to tell us what type of investor you are.

Continue

Welcome to Kepler Trust Intelligence

Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.