Buoyant revenue generation

Witan Investment Trust 14 October 2019 Review
Download PDF

Witan Investment Trust

Buoyant revenue generation

Investment trusts
Global equities

14 October 2019

Price

213.5p

Market cap

£1,852m

AUM

£2,180m

NAV*

216.8p

Discount to NAV

1.5%

NAV**

219.9p

Discount to NAV

2.9%

*Excluding income. **Including income. As at 10 October 2019.

Yield

2.3%

Ordinary shares in issue

867.5m

Code

WTAN

Primary exchange

LSE

AIC sector

Global

Benchmark

Composite (see page 3)

Share price/discount performance

Three-year performance vs index

52-week high/low

225.5p

189.6p

232.2p

192.5p

**Including income.

Gearing

Net*

10%

*As at 30 September 2019.

Analysts

Mel Jenner

+44 (0)20 3077 5720

Sarah Godfrey

+44 (0)20 3681 2519

Witan Investment Trust is a research client of Edison Investment Research Limited

Witan Investment Trust (WTAN) employs a multi-manager strategy providing a ‘one-stop shop’ for exposure to global markets. The trust’s investment director James Hart highlights WTAN’s robust revenue stream, which is underpinned by a portfolio of high-quality companies with long-term growth potential. The trust’s annual dividends have compounded by 8.7% pa over the last 10 years and by an enhanced 10.3% pa over the last five. Hart says that although expectations have moderated, the outlook for growth remains favourable, which is positive for the long-term, patient investor, despite shorter-term periods of stock market volatility.

WTAN’s NAV has outperformed its benchmark over the long term

Source: Refinitiv, Edison Investment Research

The market backdrop

Despite macro overhangs such as slowing GDP growth, an escalation in the US-China trade dispute and the lack of a Brexit resolution, so far this year global equities have delivered an above-average total return. As a result, the world market is trading on a premium forward P/E multiple versus its 10-year average, driven by high valuations of technology and defensive stocks, which suggests that a valuation-aware approach to stock selection may be beneficial.

Why consider investing in Witan Investment Trust?

‘One-stop shop’ for exposure to global markets via a multi-manager approach.

Annual dividends have increased for the last 44 consecutive years.

Focus on companies with above-average growth prospects and/or attractive valuations.

Long-term outperformance of its composite blended benchmark.

Exposure to strategies that are generally unavailable to the UK retail investor, as well as to WTAN’s niche direct investments.

WTAN’s shares trade close to NAV

The board regularly repurchases WTAN’s shares to ensure they continue to trade at a sustainable low discount (or premium) to NAV. The trust’s current 2.9% share price discount to cum-income NAV compares with the 2.5% to 2.7% range of average discounts over the last one, three and five years. WTAN has a progressive dividend policy and is heading for a 45-year run of higher annual payments; its current yield is 2.3%.

Exhibit 1: Trust at a glance

Investment objective and fund background

Recent developments

WTAN aims to deliver long-term growth in income and capital through active multi-manager investment in global equities. Funds are currently allocated to 10 external managers, and up to 12.5% is directly invested in specialist funds and smaller, niche managers. WTAN seeks external managers with the conviction to take views that may diverge from benchmark weightings.

18 September 2019: Announcement of change in the benchmark (page 4).

13 August 2019: Six-month report ended 30 June 2019. NAV TR +13.5% versus benchmark TR +14.9%. Share price TR +11.7%.

25 July 2019: Announcement of the issuance of a £50m 2.39% 32-year secured private placement note (see pages 8 and 9).

28 May 2019: Effective date for 5:1 share split.

Forthcoming

Capital structure

Fund details

AGM

May 2020

Ongoing charges

0.75% (0.83% incl. perf. fees)

Group

Self-managed (Witan Inv. Services)

Final results

March 2020

Net gearing

10%

Manager

Andrew Bell (CEO), James Hart (investment director)

Year end

31 December

Annual mgmt fee

See page 9

Address

14 Queen Anne’s Gate,
London, SW1H 9AA

Dividend paid

Mar, Jun, Sep, Dec

Performance fee

Yes (see page 9)

Launch date

February 1909

Trust life

Indefinite

Phone

+44 (0)20 7227 9770

Continuation vote

No

Loan facilities

See pages 8 and 9

Website

www.witan.com

Dividend policy and history (financial years)

Share buyback policy and history (financial years)

There have been 44 years of consecutive annual dividend increases. Chart adjusted for May 2019 5:1 share split.

Renewed annually, the board has authority both to repurchase at a discount (14.99%) and allot at a premium (10%) ordinary shares. FY16 includes repurchase from Aviva.

Shareholder base (as at 10 October 2019)

Portfolio exposure by market cap (as at end-H119)

Top 10 holdings (as at 30 September 2019)

Portfolio weight %

Company

Country

Sector

30 September 2019

30 September 2018*

Apax Global Alpha**

UK

Investment company

2.3

1.8

Syncona**

UK

Investment company

2.0

2.3

Vonovia

Germany

Real estate

2.0

1.7

Unilever

UK

Personal goods

1.7

1.5

Tesco

UK

Consumer services

1.5

N/A

BP

UK

Oil & gas

1.4

N/A

Delta Air Lines

US

Airlines

1.4

1.3

BlackRock World Mining Trust**

UK

Investment company

1.3

1.3

Taiwan Semiconductor

Taiwan

Technology

1.3

1.6

Lloyds Banking Group

UK

Banks

1.0

1.1

Top 10 (% of holdings)

15.9

15.1

Source: Witan Investment Trust, Edison Investment Research, Bloomberg, Morningstar. Note: *N/A where not in end-September 2018 top 10. **Direct fund investments.

Market outlook: Focus on longer-term opportunities

As shown in Exhibit 2 (LHS), since late 2014, overseas equities have performed considerably better than UK shares (both in sterling terms), with the dominant US market leading the charge. In recent quarters, investors have experienced elevated levels of stock market volatility due to a range of macro issues such as the ongoing dispute between the US and its trading partners, which is contributing to slowing economic growth.

However, despite the uncertain macro backdrop, in aggregate, global shares are not trading at ‘bargain-basement’ levels as shown in the right-hand table below. On a forward P/E multiple basis, the Datastream World index continues to trade at a premium to its long-term average, due to certain areas of the market trading at high multiples, such as the technology and defensive sectors. Given this valuation backdrop, investors may benefit from a patient approach, seeking reasonably valued companies with long-term growth opportunities.

Exhibit 2: Market performance and valuation

Performance of indices in £ (last 10 years)

Valuation metrics of DS World index (last 10 years, as at 11 October 2019)

 

Last

High

Low

10-year
average

Last as % of
average

P/E 12 months forward (x)

14.8

16.3

9.8

13.6

109

Price to book (x)

2.1

2.1

1.4

1.8

117

Dividend yield (%)

2.6

3.1

2.2

2.6

101

Return on equity (%)

11.4

13.3

5.0

11.0

103

Source: Refinitiv, Edison Investment Research

Fund profile: Global multi-manager strategy

WTAN was launched in 1909 to manage the investments of Alexander Henderson, Lord Faringdon, and is now managed by the executive team of its subsidiary Witan Investment Services (WIS). It aims to achieve a total return above that of its composite global benchmark over the long term, while growing the annual dividend at a rate higher than the level of UK inflation. WTAN has outperformed its benchmark in seven of the last 10 years, and has a distinguished dividend history, increasing its annual payout for the last 44 consecutive years.

In 2004, the trust became self-managed, appointed its first chief executive and adopted a multi-manager strategy, aiming to maximise returns while reducing the performance volatility risk arising from dependence on a single manager. WTAN’s overall portfolio is widely diversified by region, sector and at the individual company level, which avoids undue concentration of investment risks. The majority of its assets are run by 10 external managers via focused stock portfolios (investing in both developed and emerging markets). Gearing of up to 20% of net assets is permitted (typically in a range of 5% to 15%, but a small cash position may be held when deemed appropriate); at end-September 2019, net gearing was 10%.

WTAN’s performance is measured against a composite of FTSE indices. The benchmark has evolved over time as follows, reflecting where the trust’s board and executive team believe the best opportunities lie: from 1 September 2004 to 30 September 2007 – 50% All-Share and 50% World (ex-UK); from 1 October 2007 to 31 December 2016 – 40% All-Share, 20% All-World North America, 20% All-World Asia Pacific and 20% All-World Europe (ex-UK); and since 1 January 2017 – 30% All-Share, 25% All-World North America, 20% All-World Asia Pacific, 20% All-World Europe (ex-UK) and 5% Emerging Markets.

WTAN has announced another change to its benchmark; effective from the beginning of 2020 it will be 15% FTSE All-Share and 85% FTSE All-World indices. However, there will be no requirement to change the way that the trust’s portfolio is managed. The UK weighting in the composite benchmark will be c 20%, with 15% from the FTSE All-Share plus c 5% from the UK weighting in the FTSE All-World index. Investment director James Hart explains that WTAN’s historically high UK exposure was due to a number of factors: it was a convenient way to get exposure to global revenues within a UK legal and corporate framework; overseas markets did not offer attractive dividend yields; and UK investors seeking a ‘one-stop shop’ for global investment appreciated a high domestic weighting. He suggests that these factors are now less relevant, recognising that the opportunity set outside the UK has become wider. The board also believes that a global index rather than a collection of regional indices will be less complicated for investors to monitor.

CEO and investment director: Andrew Bell, James Hart

Investment director’s view: Growth outlook remains positive

Hart says that ongoing political issues including the US-China trade dispute, Brexit uncertainty and tensions in the Middle East have not gone away, which means there is a cloud over the market in general. However, he says it is important to focus on the growth outlook and company earnings, which despite moderated expectations, remain positive. The director highlights the importance of the roles of central banks and politicians, especially the US Federal Reserve (Fed), but also elsewhere as policymakers in Europe and Asia have responded to weakening economic signals. The Fed has reversed course by adopting a more dovish approach to monetary policy, following a series of interest rate hikes. Hart suggests that President Trump needs the domestic economy to be firing on all cylinders as he approaches re-election in November 2020. To help achieve this, he has called on the Fed to ease monetary policy and the uncertainty surrounding global trade negotiations, perhaps conveniently, has helped strengthen the president’s case in his argument with the Fed Committee. Fed governor Jerome Powell has said that the ongoing trade issue is the biggest threat to US economic growth; Hart suggests there is a danger of a miscalculation, and that further down the road, either there is no trade deal or it turns out that monetary policy is too loose, which following the 2020 presidential election could lead to higher inflation. Whatever the eventual outcome, for now, the director says the global GDP outlook remains anaemic but positive.

Hart says that equities look attractively priced on a relative basis, especially versus government bonds. He believes there are pockets of risk in the equity market, but the UK looks attractively valued, while Europe and Asia are also fairly priced for the patient, long-term investor. The director suggests that a c 13x 12-month forward P/E valuation for the global ex-US market is not expensive, although he says that while some segments of the US market look attractively valued, in others, investors are paying up for growth and for those companies with above-average growth, defensive qualities or dependable EPS progression. WTAN’s managers have reduced its US exposure in favour of more attractive opportunities elsewhere. However, Hart acknowledges that the market remains home to a significant number of world-leading businesses. He says that the UK is under a cloud for obvious reasons, which is providing many opportunities, especially in domestic mid-cap companies and large-caps with a UK focus, such as banks.

The director believes that going forward portfolio performance will more likely be a function of alpha rather than beta (stock-specific, fundamental-driven moves rather than further upside from those companies that have already outperformed). Hart believes that this should play into the hands of successful, valuation-aware active fund managers. WTAN also has the flexibility to respond to any setback in the market: if there is a 5–10% market move, for example as a reaction to a political event, the trust can adjust its level of gearing accordingly. However, the director stresses the importance of patience and selectivity during periods of stock market volatility.

Asset allocation

Investment process: Primarily external managers

As shown in Exhibit 3, c 90% of WTAN’s portfolio is allocated to 10 third-party managers, with c 12.5% in direct investments selected by WIS’s executive team (up to 10% in specialist collective funds and a maximum 2.5% in newly established or highly specialised investment firms is permitted). The external managers employ different strategies, but they are all bottom-up investors, with a particular focus on company cash flows. Managers are selected for their leadership skills, a clear and disciplined investment approach, a focus on corporate governance standards, long-term investment with concentrated portfolios constructed without reference to a benchmark, and reasonable fees. The board regularly reviews WTAN’s multi-manager line-up in terms of performance and adherence to their respective investment processes. There is a range of potential benefits to the trust’s multi-manager approach:

Specialist managers may generate higher total returns.

The majority of the external managers’ strategies are unavailable to the UK retail investor.

Multiple managers should lead to smoother investment results for WTAN.

High-conviction portfolios ensure lack of over-diversification.

WIS’s executive team can adjust portfolio exposure and manager allocations.

WTAN’s direct investments offer exposure to higher-growth areas and value opportunities.

Current portfolio positioning

WTAN’s overall portfolio is widely diversified (generally having 350–400 underlying holdings). At end-September 2019, its top 10 positions made up 15.9% of the fund (+0.8pp year-on-year). The trust’s multi-managers are highlighted in Exhibit 3 (including a link to individual manager videos on WTAN’s website). The majority of them – including the trust’s direct holdings – have outperformed their respective benchmarks since their appointment, with particularly strong relative performance from Lindsell Train, GQG Partners and Lansdowne Partners.

Exhibit 3: Witan portfolio analysis and performance by investment manager

Equity mandate

Investment manager

Benchmark
(total return)

Investment style

% of AUM at
30 September 2019*

Inception
date

Performance (% pa, inception to end-June 19)

Witan

B’mark

Diff.

UK

Artemis

FTSE All-Share

Recovery/special situations

7

06-May-08

8.4

6.1

2.3

UK

Heronbridge

FTSE All-Share

Intrinsic value growth

6

17-Jun-13

9.1

7.1

2.0

UK

Lindsell Train

FTSE All-Share

Long-term growth from undervalued brands

8

01-Sep-10

16.2

8.6

7.6

Global

Lansdowne Partners

DJ Global Titans

Concentrated, benchmark-independent investment in developed markets

16

14-Dec-12

17.1

13.8

3.3

Global

Pzena

FTSE All-World

Systematic value

13

02-Dec-13

10.1

12.6

(2.5)

Global

Veritas

FTSE All-World

Fundamental value, real return objective

15

11-Nov-10

14.0

11.6

2.4

Europe

CRUX

FTSE Europe ex-UK

Sound businesses with quality management and attractive valuations

5

27-Oct-17

2.6

2.9

(0.3)

Europe

S W Mitchell

FTSE Europe ex-UK

High-conviction portfolio of companies that offer unrecognised value

5

27-Oct-17

(0.4)

2.9

(3.3)

Asia Pacific (incl. Japan)

Matthews Int'l

MSCI Asia Pacific Free

Quality companies with dividend growth

10

20-Feb-13

9.5

8.7

0.8

Emerging markets

GQG Partners

MSCI Emerging Markets

High-quality companies with attractively priced growth prospects

5

16-Feb-17

11.0

6.9

4.1

Directly held investments

Witan's executive team

Witan’s composite benchmark

Undervalued specialist collective funds and smaller manager mandates

11

19-Mar-10

10.9

9.1

1.8

Source: Witan Investment Trust. Note: *Percentage of Witan’s assets managed, numbers subject to rounding.

During H119, WTAN invested £20m in the GMO Climate Change Fund, a specialist vehicle seeking strong returns from investing in companies aiming to combat or mitigate the effects of climate change. This is a new strategy for GMO, which was founded in 1977 by Jeremy Grantham, who is a long-term advocate of the increased awareness of the impact that climate change can have on investments, as well as the planet. The manager, Lucas White, has a pragmatic approach with a keen eye on valuation, focusing on companies that are generating cash flows rather than on more speculative ‘blue sky’ businesses.

Also, during H119, WTAN invested in a number of equity and bond futures to take advantage of tactical opportunities and for efficient portfolio management. Over the period, the trust realised a £2.3m profit from investing in futures.

Exhibit 4: Portfolio distribution by geography (left) and sector (right) as at 30 September 2019

Source: Witan Investment Trust, Edison Investment Research. Note: Numbers subject to rounding.

Exhibit 4: Portfolio distribution by geography (left) and sector (right) as at 30 September 2019

Source: Witan Investment Trust, Edison Investment Research. Note: Numbers subject to rounding.

As highlighted in Exhibit 4, WTAN is broadly diversified by geography and sector. An analysis of its largest 20 holdings (which are the by-product of a number of individual investment decisions) reveals that over the last 12 months to end-September 2019, there have been notable changes. As examples, into the list went major energy company BP, which has one of the lowest costs of production among the oil majors, is trading on an attractive valuation and has been growing its dividends, and out came two major US financial institutions, Bank of America and JPMorgan Chase. These positions were part of a wider exposure to high-quality names in the US banking sector; they are firms that flourished during the recovery following the global financial crisis, but are no longer as attractively valued as they were.

Another top 20 position is Lloyds Banking Group. The director says the company’s share price is under pressure due to the Brexit overhang; however, he suggests the company is generating sufficient cash flow to reward patient investors, while the payment protection insurance (PPI) saga is coming to an end.

Hart comments that having been a strong performer in the prior two years, in H119, the largest detractor from performance was the top 10 holding in healthcare fund Syncona. Investors were a little disappointed that two companies – Nightstar Therapeutics and Blue Earth Diagnostics – were sold to third parties. However, the fund’s manager needed to weigh up the risk/reward of additional upside versus the sale value. Holding a meaningful amount of cash has negatively affected Syncona’s valuation, and the fact that Woodford Investment Management also owned a position in the company and in Autolus (Syncona’s largest investment), led to an additional overhang in its share price; although the Woodford overhang has now been removed.

Performance: Robust medium and long-term returns

Exhibit 5: Five-year discrete performance data

12 months ending

Share price
(%)

NAV
(%)

Composite
benchmark* (%)

MSCI World
(%)

FTSE All-
Share (%)

FTSE AW North
America (%)

30/09/15

6.4

3.7

(0.7)

2.1

(2.3)

4.6

30/09/16

16.5

24.9

24.8

30.6

16.8

34.1

30/09/17

24.8

19.2

15.6

15.0

11.9

14.9

30/09/18

10.5

9.6

9.2

15.1

5.9

20.3

30/09/19

0.3

1.4

5.4

8.4

2.7

10.4

Source: Refinitiv. Note: All % on a total return basis in £. *See fund profile section on page 3. Since 1 January 2017, 30% FTSE All-Share, 25% All-World North America, 20% All-World Asia Pacific, 20% All-World Europe (ex-UK) and 5% Emerging Markets.

In H119 (ending 30 June), WTAN’s NAV and share price total returns of +13.5% and +11.7% respectively trailed the benchmark’s +14.9% total return. The trust’s underlying portfolio, before the positive effects of gearing during a strong market, underperformed the composite benchmark by 2.0pp. Six of the external managers outperformed their respective benchmarks: GQG (+9.3pp); S W Mitchell (+8.1pp); Lindsell Train (+7.5pp); Heronbridge (+3.3pp); CRUX (+1.8pp); and Veritas (+0.3pp). The majority of the four underperforming managers currently have a cyclical/value bias and lagged during the first half of this year as investors favoured growth and defensive stocks: Lansdowne Partners (-10.4pp); Pzena (-5.7pp); Matthews (-5.4pp); and Artemis (-1.7pp). WTAN’s direct holdings also underperformed the composite benchmark by 11.6pp, primarily due to a reduction in Syncona’s premium to NAV and a lack of price momentum from the trust’s private equity holdings, despite solid NAV growth.

Exhibit 6: Investment trust performance to 30 September 2019

Price, NAV and benchmark total return performance, one-year rebased

Price, NAV and benchmark total return performance (%)

Source: Refinitiv, Edison Investment Research. Note: Three-, five- and 10-year performance figures annualised.

Exhibit 7 highlights WTAN’s relative returns. The trust’s NAV has outperformed its composite benchmark over five and 10 years (its share price has also outperformed over three years), although over shorter time periods, relative performance has been more challenging as investors have continued to favour higher-valued shares with perceived ‘safe’ businesses. Of interest to UK investors, WTAN has significantly outperformed the bellwether FTSE All-Share index over both the mid- and long term.

Exhibit 7: Share price and NAV total return performance, relative to indices (%)

 

One month

Three months

Six months

One year

Three years

Five years

10 years

Price relative to composite benchmark

0.7

(0.5)

(1.2)

(4.9)

3.9

3.9

26.1

NAV relative to composite benchmark

(0.1)

(0.4)

(0.9)

(3.8)

(0.4)

4.1

11.5

Price relative to MSCI World

1.4

(2.1)

(4.2)

(7.5)

(3.7)

(10.5)

0.1

NAV relative to MSCI World

0.6

(2.0)

(3.8)

(6.4)

(7.7)

(10.3)

(11.4)

Price relative to FTSE All-Share

(0.6)

0.5

1.6

(2.4)

13.5

23.3

47.3

NAV relative to FTSE All-Share

(1.4)

0.6

2.0

(1.3)

8.8

23.6

30.3

Source: Refinitiv, Edison Investment Research. Note: Data to end-September 2019. Geometric calculation.

Exhibit 8: NAV total return performance relative to benchmark over three years

Source: Refinitiv, Edison Investment Research

Discount: Active discount management

The board aims to ensure that WTAN’s share price trades at a sustainable low discount or premium to NAV; it has the authority, renewed annually, to repurchase up to 14.99% and allot up to 10% of WTAN’s shares in issue. In H119, c 10.8m of shares (c 1.2% of the share base) were repurchased at a cost of c £22.5m. This represents an increase in buyback activity in response to a modest widening of the discount. The board is prepared to issue shares when they are trading at a premium to NAV (Exhibit 1).

WTAN’s current 2.9% share price discount to cum-income NAV is towards the wider end of the 0.3% to 4.0% range of discounts over the last 12 months. It compares with the 2.5%, 2.7%, 2.5% and 6.2% average discounts over the last one, three, five and 10 years respectively.

Exhibit 9: Share price discount to NAV (including income) over three years (%)

Source: Refinitiv, Edison Investment Research

Capital structure and fees

WTAN is a conventional investment trust with one class of share; there was a five-for-one share split in May 2019 and there are currently 867.5m ordinary shares in issue. On 25 July 2019, WTAN announced the issuance of a £50m 2.39% fixed-rate 32-year secured private placement note. The board says this is an attractive rate (a record low for long-term debt in the investment trust sector), which should enhance WTAN’s long-term investment performance. Total structural borrowings will increase from £172m to £222m, with the proceeds of the new note used to pay down part of the trust’s short-term borrowings of £81m. Interest on the note will be paid semi-annually and the funding date was 1 October 2019, at which time the effective rate on the trust’s structural borrowings decreased from 4.3% to 3.8% and, assuming no further changes to the capital structure, will decline to c 3.0% in 2025. There is no change to WTAN’s gearing policy – up to 20% of net assets is permitted; at end-September 2019, net gearing was 10%. The level of gearing varies depending on perceived opportunities; it was increased in June 2019 following equity market weakness in the preceding month, as central banks announced easier monetary policies in response to economic weakness.

WTAN’s external managers’ base fees range from 0.25% to 0.70% pa (the FY18 weighted average was 0.52%, in line with FY17). Two managers (accounting for c 13% of WTAN’s assets under management) are eligible for performance fees but have lower base fees. The majority of the fee structures taper, with lower rates paid on a higher level of assets under management. WTAN’s FY18 ongoing charges were 0.75% (FY17: 0.76%); including performance fees they were 0.83% (FY17: 0.78%). In H119, ongoing charges were 0.39% (H118: 0.38%); including performance fees they were 0.46% (H118: 0.42%). These are half-year rather than annualised figures.

Dividend policy and record

WTAN pays quarterly dividends in March, June, September and December; barring exceptional circumstances, the first three interim payments are equal to one quarter of the prior year’s annual dividend, while the final payment is higher. The board aims to grow the annual dividend at a rate higher than UK inflation (CPI); over the last decade the dividend has compounded at rate of 8.7% pa (10.3% pa over five years). WTAN has increased its annual dividend for the last 44 consecutive years, and the board is anticipating another gain in FY19, fully funded from revenue earnings, along with another addition to reserves, which are now equivalent to 1.5x the last annual dividend. In H119, WTAN’s revenue return per share was 3.42p (+8.9% year-on-year), while two dividends have been declared for the period totalling 2.35p per share (+11.9% year-on-year). The higher level of income was due to increased company payouts, changes in portfolio holdings and sterling weakness compared with overseas currencies. WTAN currently offers a 2.3% dividend yield.

Peer group comparison

Exhibit 10: AIC Global sector as at 11 October 2019*

% unless stated

Market
cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Discount
(cum-fair)

Ongoing
charge

Perf.
fee**

Net
gearing

Dividend
yield

Witan

1,852.1

8.4

25.5

76.2

180.2

(2.9)

0.8

Yes

110

2.3

Alliance Trust

2,578.0

10.4

31.7

87.8

172.1

(6.4)

0.6

No

105

1.8

AVI Global Trust

808.1

3.4

24.7

63.8

113.3

(10.7)

0.9

No

106

1.8

Bankers

1,147.6

12.8

35.4

91.3

196.2

(2.1)

0.5

No

100

2.2

Brunner

335.6

11.9

26.1

70.2

158.9

(12.7)

0.7

No

108

2.5

EP Global Opportunities

124.0

(0.6)

15.7

51.7

111.9

(7.3)

0.9

No

100

1.8

F&C Investment Trust

3,743.8

11.7

33.6

89.9

200.5

(6.0)

0.6

No

108

1.7

JPMorgan Elect Managed Growth

253.8

5.8

28.6

69.1

176.7

(2.5)

0.5

No

100

1.9

Lindsell Train

280.5

34.7

110.9

262.3

628.4

30.7

0.9

Yes

100

2.1

Majedie Investments

133.7

(3.1)

5.4

44.1

97.1

(15.7)

1.0

No

111

4.5

Manchester & London

150.3

7.8

54.9

113.9

107.1

(4.2)

0.8

No

100

2.7

Martin Currie Global Portfolio

235.7

20.5

37.7

91.7

201.5

(1.7)

0.6

Yes

100

1.5

Mid Wynd International

244.8

18.2

38.9

116.6

229.8

2.5

0.5

No

100

1.0

Monks

1,942.3

13.8

43.5

110.5

175.9

3.1

0.5

No

106

0.2

Scottish Investment Trust

611.8

2.6

17.9

66.0

137.5

(8.7)

0.4

No

101

3.0

Scottish Mortgage

7,415.4

13.5

54.6

147.8

392.2

(3.0)

0.4

No

107

0.6

Average

1,366.1

10.7

36.6

97.1

205.0

(3.0)

0.7

104

2.0

WTAN rank in group (16 trusts)

5

10

12

10

7

7

6

2

5

Source: Morningstar, Edison Investment Research. Note: *Performance data to 10 October 2019 based on ex-par NAV. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets. **Two of WTAN’s managers are eligible for performance fees.

WTAN is a member of the 16-strong AIC Global sector. Its NAV total returns are below average over the periods shown. The trust is trading on a narrower discount than its closest peer Alliance Trust, which also employs a multi-manager strategy. WTAN’s ongoing charge is modestly above average and two of its external managers are eligible for performance fees. It has the second highest level of gearing in the peer group and an above-average dividend yield (34bp higher than the mean).

The board

WTAN’s board has four primary responsibilities: governance, risk assessment, selecting the multi-managers and assessment of the fund’s performance. It currently has 10 directors, nine of whom are independent of the manager. Chairman Harry Henderson (since 2003) joined the board in 1988 and will retire at the May 2020 AGM. The other independent directors and their dates of appointment are: Tony Watson (senior independent director, February 2006), Richard Oldfield (May 2011), Suzy Neubert (April 2012), Ben Rogoff (October 2016), Jack Perry (January 2017), Paul Yates (May 2018), Andrew Ross (chairman-elect, May 2019) and Gabrielle Boyle (August 2019). Andrew Bell is CEO of WTAN, so is considered to be non-independent; he joined the board in February 2010.

Boyle’s appointment was effective from 16 August 2019. She is senior fund manager and head of research at Troy Asset Management. Prior to joining Troy in 2011, Boyle was a senior managing director at Lazard Asset Management, where she was responsible for the global and international equity select business.

General disclaimer and copyright

This report has been commissioned by Witan Investment Trust and prepared and issued by Edison, in consideration of a fee payable by Witan Investment Trust. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Witan Investment Trust and prepared and issued by Edison, in consideration of a fee payable by Witan Investment Trust. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues