Alliance Trust wants ‘more ethnically diverse board’

The £3.5 billion Dundee investment trust company Alliance Trust plc has announced it wants to “achieve a more ethnically diverse board” over the next two years because “the board is currently all white and all British.”

The plan was announced as Alliance Trust, which uses external fund managers Willis Towers Watson (WTW), reported a 2021 total shareholder return of 16.5% and net asset value (NAV) total return of 18.6% while its benchmark index returned 19.6%.

The fund’s benchmark is the MSCI ACWI Index, MSCI’s flagship global equity index.

“Performance in the year was significantly ahead of the company’s benchmark index until the fourth quarter when the index became dominated by the performance of a few of the largest US technology companies,” said Alliance Trust.

Profit before tax for Alliance Trust was £543.3 million — more than double the £229.9 million profit in 2020.

Alliance Trust significantly increased its total dividend, up 32.5% from 14.38p in 2020 to 19.05p in 2021.

“This was achieved by increasing the third and fourth interim dividends for 2021 by 62.0% from that paid at the same time last year …” said the fund.

“The increase in the company’s dividend was implemented by the board after a review of the level and funding of the dividend which included obtaining and listening to the views of shareholders.

“The board believes that the increased level of dividend is both sustainable and affordable and it expects to extend the company’s 55-year track record of annual dividend increases for many years.”

Alliance Trust aims to deliver long-term capital growth and rising income from investing in global equities — and it blends the top stock selections of some of the world’s best active fund managers as rated by Willis Towers Watson.

Alliance Trust chairman Gregor Stewart wrote in the firm’s annual results statement: “The company has delivered a strong absolute performance with a Total Shareholder Return of 16.5%.

“Against the backdrop of new Covid-19 variants, increasing inflation and a few large technology companies dominating returns, this was a robust result although behind our benchmark.

“A significant increase in dividends was introduced for the third and fourth interim dividends resulting in a year-on-year total increase of 32.5%.”

On the structure of the company’s board going forward, Stewart wrote: “We are mindful that the board is currently all white and all British.

“As we refresh the board, in addition to ensuring that we have a diverse range of individuals with the necessary skills and knowledge, we are aiming to achieve a more ethnically diverse board by 2024 or earlier.

“This is in line with the recommendations of the Parker Review.

“In accordance with our succession plan, we anticipate recruiting at least one further director during 2022, which will both enhance the board’s existing skills and help us achieve this aim.”

At 57.6% of the portfolio as at December 31, 2021, the US represents by far the largest country weighting for Alliance Trust. The fund has 14.3% of its portfolio in Europe, 13% in Asia and emerging markets, and 10.5% in the UK.

Alliance Trust said Google parent Alphabet Inc. was the largest contributor to its performance during the year, up 66%.

“Alphabet’s reported revenues grew significantly over the year, largely on the back of strong growth in advertising revenues, including solid growth in YouTube revenues,” said the fund.

“Google Cloud, another business segment of the tech giant, also delivered solid results despite still being loss making.

“The company is held across five Stock Pickers as at the 31 December 2021, with many impressed by the company’s execution and growth potential while remaining cognisant of valuation and rising regulatory risks.”

The second largest contributor to performance was Nvidia Corporation, up 127% over the year.

“Nvidia designs graphics processing units (GPUs) for the gaming and professional markets, as well as ‘system on a chip’ (SoC) units for the mobile computing and automotive market,” said Alliance Trust.

“The company is benefitting from a sustained increase in demand for its products, driven in part by gaming consoles that use Nvidia’s GPUs (which constitute more than half of its revenue) and in part by cryptocurrency infrastructure.

“Evergrowing demand for the company’s cloud storage has also fuelled robust spending by Nvidia’s largest customers and has been a source of high margin revenue strength.

“Continued growth in the firm’s large gaming sector business and a growing automotive pipeline are other key factors in the positive outlook for the company.

“Nvidia was held in the portfolio by both GQG Partners and Vulcan Value Partners over 2021.”

Alliance Trust added: “KKR & Co. Inc., an American global investment company held by Vulcan Value Partners, was the third largest contributor to performance for the year.

“KKR is a global investment firm that manages multiple alternative asset classes.

“It has stable capital with a stable client base and predictable earnings. KKR has enjoyed the favourable tailwind of increasing allocations by investors to private and alternative investments.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.