Alliance Trust beats index, but assets fall to £3.1bn

Alliance Trust plc, the £3.1 billion Dundee investment trust company which uses external fund managers Willis Towers Watson (WTW), announced that its 2022 total shareholder return (TSR) was -5.8% and its net asset value (NAV) total return was -7.1% in 2022.

Both the TSR and NAV Total Return for Alliance Trust were ahead of its benchmark, the MSCI ACWI, which returned -8.1%.

The Dundee closed-end fund also outperformed most of its peers in the Association of Investment Companies (AIC) Global Sector, where the average TSR was -23.2%.

Alliance Trust said the fund’s performance “benefitted from the portfolio’s balanced style exposures, avoiding the worst of growth stock declines.”

Alliance Trust aims to deliver long-term capital growth and rising income from investing in global equities.

It “blends” the top stock selections of some of the “world’s best active managers” as rated by Willis Towers Watson, into a single diversified portfolio.

Alliance Trust has appointed Edinburgh-based Juniper Partners Limited as its Company Secretary with Juniper also providing finance, fund administration and accounting services to Alliance from April 1, 2023.

Alliance Trust said its 2022 total dividend of 24p per ordinary share is a 26% increase on 2021.

“The company expects to extend its 56-year track record of increasing dividends,” said the fund.

Total assets of Alliance Trust fell to £3.1 billion at the end of 2022 compared to £3.7 billion a year earlier.

“Whereas in previous years, our diversified stance had held back performance versus the market and many growth-style peers, due to the concentration of returns in a handful of expensive US growth stocks, in 2022 it enabled us to avoid the worst of the tech rout and, at the same time, benefit from the recovery in energy stocks,” wrote the fund’s investment managers in their report.

“Not owning Tesla and Apple boosted relative returns versus the index, and although we continue to own some other fallen growth stars such as Amazon, and Alphabet, the relative modesty of our exposures helped to contain the damage.

“The oil companies ExxonMobil in the US (held by GQG Partners), BP in the UK (held by Jupiter Asset Management) and Petrol Brasileiro in Brazil (held by GQG) were among the biggest contributors to relative returns.

“Our stock pickers also found winners in defence, where BAE Systems (held by Veritas Asset Management) and Booz Allen Hamilton (held by Black Creek Investment Management) benefitted from rising demand due to increased government spending.

“Our positions in healthcare and financials, with US-based UnitedHealth Group (held by GQG and Veritas), and Indian bank HDFC (held by GQG) also boosted returns …

“Our role as investment manager is to select the best stock pickers available globally and blend them together into a balanced portfolio, reallocating capital between them where necessary to control risk.

“We consciously did not change the strategic stance of the portfolio during the year, although we terminated River and Mercantile Asset Management’s (R&M) mandate in March due to a change in corporate ownership which we thought could undermine the firm’s investment culture.

“At the time, R&M’s relatively small allocation accounted for approximately 6% of the portfolio.

“This capital was redistributed to existing stock pickers with similar investment approaches, principally Jupiter and Black Creek, to retain the portfolio’s overall style balance, although some of the capital also went to GQG …”

Alliance Trust plc chairman Gregor Stewart said: “We are pleased that our performance was more resilient than the market and ahead of most of our peers in the AIC Global Sector.”

The company said its 2022 income grew to £95.521 million from the prior year’s £62.282 million and that it made a loss before tax of £235.868 million compared to a 2021 profit of £543.316 million.