Page 8 - DIY Investor Magazine - Issue 26

ALLIANCE TRUST:
A STANDOUT TRUST FOR THE UNCERTAIN TIMES AHEAD
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.
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...
Astheendofayear,whichfewofuswillbesadtosay goodbye to, approaches, the new ISA season draws closer. This typically leads to a flurry of activity among investors seeking to top up their ISAs before the end of the tax year in April, or to use their new ISA allowance once the new tax year commences. For ordinary investors, choosing the right things in which to invest can be a tricky task at the best of times, and the forthcoming ISA season offers a greater challenge than most.
After collapsing in March 2020, equity markets around the world have soared despite the almost universally gloomy economic outlook that COVID has created, making it harder than ever to know where to invest.
With that in mind we at Kepler Trust Intelligence highlight what we believe to be a standout ‘all-in-one’ vehicle which can make the process of stock selection simpler for investors.
ALLIANCE TRUST
Typically diversification is the first port of call to navigate uncertain economic situations. One way to do this is through multi-manager strategies. Alliance Trust uses a multi-manager structure and has offered high levels of alpha, as well as diversification across investment styles, industries and geographies.
It is also one of few multi-manager funds with access to underlying funds which have been created specifically to meet its requirements – rather than buying ‘off the peg’ from existing strategies.
Close to three years ago, ATST ‘changed its spots’ and adopted a new approach which has seen the management of the portfolio outsourced to nine individual fund management groups in different parts of the world.
Since this change in strategy, which we discuss in greater detail here, performance has improved dramatically, particularly when compared to its peers.
When Willis Tower Watson (WTW) took over the management of the portfolio there were still a number of non-core assets which they wanted to dispose of, including a savings platform as well as legacy private equity investments.
If we exclude the impact of these holdings from the calculations, ATST’s portfolio has outperformed its peer group and performed in line with the benchmark. Over the three- year period to 23/10/2020, ATST’s portfolio is up 22.8% on a NAV total return basis, compared to a median NAV return of 14.7% from the AIC Global sector. We believe the returns are particularly impressive in comparison to other multi-manager trusts in the sector, which we estimate to have an average NAV total return of only 13.8% (Source: Morningstar).
As one might expect from a global equity strategy, the trust was not immune to the impact of COVID-19. However, the performance of the trust rebounded strongly as the market started to recover. In fact,
DIY Investor Magazine | Dec 2020 8