Witan follows a highly active ‘manager of managers’ approach, using a range of third-party managers to gain exposure to global equity markets...

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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.

Witan

Witan follows a highly active ‘manager of managers’ approach, using a range of third-party managers to gain exposure to global equity markets. Currently, the company consists of ten managers, who run a collection of concentrated portfolios under the overall asset allocation plan set by CEO Andrew Bell and the management team. Alongside this, the executive team runs up to 12.5% of the portfolio, investing in specialist collective funds and smaller managers that could be constituents in the future.

The trust’s objective is to generate long-term NAV growth and to deliver income at a rate greater than inflation. Since adopting the multi-manager approach in 2004, the trust has performed strongly. Over five and ten-year periods, to the end of 2018, Witan has delivered an NAV total return of 52.1% and 207.1% respectively, compared with the benchmark’s 44.6% and 163.4%. For most of 2018, Witan’s returns were positive and ahead of the benchmark. However, Q4 hit the trust particularly hard and the macro and political uncertainty, coupled with the trust's gearing, meant the trust ended in negative territory.

Alongside capital appreciation, the trust offers investors a decent income stream. The trust has an enviable track record of 44 years of dividend increases, and the 2018 dividend of 23.5p was 11.9% greater than the 21p paid in 2017 and once again greater than the rate of inflation and fully funded by earnings. As of the most recent annual report (December 2018), the trust has revenue reserves that cover the dividend by 1.5x, adding further reassurance to income dependent investors.

Over the past few years, the discount has narrowed significantly. After trading on a discount of close to 10% to NAV in 2016, the trust now trades at a discount of 2.5%. The board places a high degree of importance on creating sustainable liquidity at or near to asset value and has buyback authority which it continues to use as necessary.

Kepler View

Witan boasts a strong long-term track record, and the team has a proven ability to identify strong managers for the fund’s allocations. Alongside this, since the change of strategy in 2004, Andrew Bell has shown the ability to add considerable value through the direct holdings portfolio. This was shown in 2018, where the trust beat its benchmark with little trouble. Additionally, through having 2.5% of the portfolio in less well-known managers, the team is able to keep an eye on the funds of tomorrow, getting to know the management in more detail and making sure they are always one step ahead should a current manager need to be replaced.

We continue to see Witan as the perfect vehicle for investors who want a diversified, core global holding, without the fuss. It could also serve as a “one-stop shop” for novice investors who want diversified exposure without having to manage their own allocations.

Despite the multi-manager approach, the trust sits in line with the rest of peer group for fees and charges, meaning that the common worry of being ‘double charged’ with a fund of funds is dispelled.


BULL
BEAR
A well-defined and simple to understand investment approach means that investors are able to benefit from a diversified array of concentrated portfolios
As a highly active global trust it may lack appeal for investors who want to do their own asset allocation
Since the change in strategy in 2004, the trust has delivered strong returns
Due to poor performance in Q4, the trust was unable to outperform the benchmark in 2018
A reliable dividend, progressively growing for the past 44 years

William Sobczak
William joined Kepler Partners in February 2018 as an investment trust analyst. Prior to joining, William graduated from the University of Western Australia, with a BSc in Psychology.

Fund History

Disclaimer

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

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