Dundee-based investment trust firm Alliance Trust said its investments had underperformed its benchmark in the six months to June 30 “reflecting the turbulent market conditions around the EU referendum.”

However, since June 30 Alliance Trust’s share price has since risen to a new high of around 557p, giving the firm a stock market value of almost £2.9 billion.

Alliance Trust chairman Robert Smith said that a strategic review of the group “encompassing a broad range of potential courses of action” was progressing well and the firm will report on the outcome later in the year.

US activist shareholder Elliott Advisors owns more than 10% of Alliance Trust shares and has long been putting pressure on Alliance to restructure.

In June, RIT Capital Partners, the investment trust chaired by Lord Rothschild, said it would not, after all, make a takeover offer for Alliance Trust.

Alliance had received an informal takeover approach from RIT to create a quoted company with a stock market value of more than £5 billion.

Smith said: “In volatile markets we continue to make good progress against the initiatives outlined last year to enhance shareholder value. 

“Costs are coming down, ATI and ATS are making good strides towards profitability, and a fully non-executive board is in place.

“In addition we announced during the period that the board has initiated a strategic review of the group, encompassing a broad range of potential courses of action. 

“This review is progressing well and we will report back on the outcome later in the year.

“Investment performance in the period underperformed the benchmark, reflecting the turbulent market conditions around the EU referendum when the Trust’s quoted equity portfolio gave up the outperformance it had recorded over the prior five months.

“However, since the period end Alliance Trust’s share price has reached new highs.”

Alliance said its total shareholder return of 2.6% and net asset value total return of 6.6% compared to the MSCI ACWI benchmark return of 12%.  

Smith said the quoted equity part of the Alliance Trust’s portfolio outperformed the MSCI ACWI index for the five month period to the end of May.

“In June, and following the EU Referendum, this out-performance was reversed resulting in the equity portfolio returning 9.5% for the period against the benchmark’s 12.0% return,” said the chairman.

“The NAV (net asset value) was also impacted by a number of other items such as the value of debt and a pension scheme buy in transaction.

“The combination of these items generated the Trust’s NAV Total Return of 6.6%, with a Total Shareholder Return (TSR) at 2.6%.

“Against this background it should be noted that since the change in our investment management team in September 2014, the quoted equity part of the Trust’s portfolio has performed slightly ahead of the MSCI ACWI.

“In common with many of our peers, the Trust’s share price discount to NAV widened at the end of the period.”

The Trust’s expenses fell by more than 30%, down to £7.7 million from £11.1 million in the comparable period last year.

Alliance said the Trust’s best performing stocks in the period were companies associated with the cloud computing industry, including Equinix and Accenture. 

The financial sector “was a source of underperformance” for the Trust as two core holdings, Prudential and Legal & General, performed poorly over the period.

“Both companies have been hit by fears around the implications of the EU Referendum, particularly the risk that higher interest rates and bond yields in the UK are now many years away,” said Alliance.

For its investment outlook, Alliance Trust said: “The economic outlook for the second half of 2016 appears unclear after the EU Referendum vote.

“The UK economy appears set for at least a mild recession as investment and consumption freeze up in the midst of so much uncertainty.

“The question remains as to whether this will spill over into Europe and result in a slowdown across the global economy.

“The unprecedented nature of the current situation makes forecasting the impact particularly challenging.

“Political risks abound; from the US presidential election in November to other important elections and referendums in China, Germany, France and Italy over the next 18 months.

“With global economic growth already fragile, political uncertainty is sure to be a headwind for equity markets.

“In this uncertain environment we believe a defensive portfolio that is invested in companies that are growing through structural change — rather than those that are dependent on cyclical tailwinds — will be key to investment performance.”