The £5.5 billion Dundee-headquartered investment trust company Alliance Witan plc said its investment manager Willis Towers Watson (WTW) is conducting “a structured review of the investment strategy” after the fund’s first half performance lagged the MSCI All Country World Index (ACWI).
In its results for the six months ended June 30, 2026, Alliance Witan reported net asset value (NAV) total return of 7.0% and total shareholder return of 6.0% versus 12.7% for the MSCI ACWI index.
“Technology underweights and stock selection in technology/financials were key detractors from relative returns,” said Alliance Witan.
“Discount widened to 5.1% at the end of the reporting period versus 4.1% at end of 2025.
“Second interim dividend of 7.33p declared, the total of the first two interim dividends declared for 2026 is 14.66p (2025: 14.16p), representing an increase of 3.5% on the same payments for 2025.
“Barring any unforeseen circumstances, it is anticipated that the company’s third and fourth interim dividends will be at least equal to the first and second interim dividends, meaning that the annual dividend for 2026 will increase for the 60th consecutive year.”
Alliance Witan chair Dean Buckley said: “Although the Company delivered a positive NAV total return of 7.0% in the first half, this was behind the MSCI ACWI return of 12.7%, and relative performance was below the board’s expectations.
“The shortfall reflected a market in which returns were unusually concentrated in AI-related stocks, where our deliberately diversified portfolio did not participate in every area of momentum.
“The board has continued to challenge WTW and engage with the stock pickers to understand the drivers of performance and to assess whether the portfolio remains well positioned to deliver strong returns for shareholders.
“With the board’s support, WTW is conducting a structured review of the investment strategy including stock picker selection, stock selection, portfolio construction, and risk management.
“While no major change is expected to the company’s diversified, high-conviction approach, the review will guide any future enhancements to our investment process as we endeavour to improve shareholder outcomes.”
Investment managers Craig Baker, Stuart Gray and Mark Davis of Willis Towers Watson wrote: “We are not satisfied with the relative outcome for the period. The Company’s NAV total return was positive, but it lagged a benchmark in which gains were unusually concentrated in AI-related stocks and associated supply-chain beneficiaries.
“In that environment, a diversified portfolio drawing on multiple investment styles was at a short-term disadvantage.
“However, we remain confident that the portfolio is well placed to navigate a range of market environments and to build wealth for shareholders over the long term. The portfolio has meaningful exposure to attractive AI‑related businesses, while also owning many companies with strong fundamentals whose value we believe has yet to be fully recognised by the market.
“The biggest drag on relative returns in the first half of the year was our underweight in the booming technology sector, although stock selection in the sector was also negative. Stock selection in financials was the other main detractor from relative performance …
“Although AI is changing the world, it is still not clear what the ultimate profitability or free cash flow of specific companies will be over the next 20 years, or even the next few years. Yet market valuations are beginning to price this in with higher degrees of certainty, while being overly pessimistic about less speculative opportunities in traditional industries.
“As a result, the dispersion of returns between stocks is now quite elevated, presenting an ideal opportunity for skilled active managers to add value by picking long-term winners and avoiding losers.
“As with the internet, it’s possible that the public reaps the biggest benefits from cheap and widespread access, while the largest AI companies earn only modest returns on their massive investments.
“The very recent underperformance of the so-called ‘Magnificent Seven’ as a group – NVIDIA, Apple, Meta, Alphabet, Amazon, Microsoft, and Tesla – in which we are underweight, certainly points to investor doubts, underlined by the rising costs of long-term debt for these companies.
“Amid euphoric investor sentiment in technology and with the market so concentrated, history suggests there will be a reckoning at some point, though who knows when.
“Ultimately, long-term outcomes will be driven by the ability to identify and back high-quality, attractively valued companies, on a case-by-case basis.
“In our view, this reinforces the need to adopt a diversified, disciplined approach to investing that focuses on stock selection based on underlying business values rather than placing unquestioning belief in a binary market narrative.”