Witan Pacific diversifies manager line up – The Board of Witan Pacific Investment Trust has announced changes it intends to make to the line-up of external delegated investment managers within its multi-manager structure.
The initial structure will be approximately:
- Aberdeen Standard Investments 25% (previously 42%)
- Dalton Investments LLP 10% (new)
- Matthews International Capital Mgt. 40% (previously 47%)
- Robeco Institutional Asset Mgt. 25% (new)
The holding in the Gavekal Asian Opportunities UCITS Fund, which previously constituted 10% of the Company’s assets, will be sold as part of the transition process and the Board thanks Gavekal for its stewardship since 2012.
Each manager will, as at present, manage a portfolio with the objective of outperforming the MSCI AC Asia Pacific index (GBP), which is the Company’s Benchmark. The intention of the revised structure is to enhance the potential for outperformance by accentuating the emphasis on active portfolio management and stock selection to provide shareholders with exposure to a broad set of opportunities across the region. Although the managers each have mandates covering the entire Asia Pacific region, the revised mix is expected to increase portfolio exposure to smaller capitalisation or lesser-known companies whose growth prospects have more chance of being underestimated by the market. This balances Aberdeen’s established record in managing portfolios in larger capitalised companies. The Board has decided to retain 40% with Matthews which reflects the Board’s continued confidence in their investment strategy, including higher exposure to faster-growing economies and to companies with greater dividend growth prospects.
Robeco is owned by ORIX Corporation, a Tokyo-listed financial services group. The Asian equity team (headed by Arnout van Rijn) has been in place since 1990 and now manages nearly US$7bn out of its office in Hong Kong. Robeco’s investment approach combines a value approach with awareness of business and price momentum with the aim of constructing portfolios of attractively-valued shares while avoiding value traps. Whilst their portfolio may have similar geographic weightings to the benchmark, it will tend to look very different from the benchmark as it has a high active share which is the result of active bottom-up stock selection. The aim is for performance to be driven by stock selection rather than country, macro-economic or political factors.
Dalton Investments is an independent, investment boutique established in Santa Monica, California in 1999 by the seasoned Asian investor James B. Rosenwald III. Dalton, which has approximately US$3.3bn under management, follows a fundamental value approach, based upon four tenets – investing in good businesses, with a significant margin of safety, where management is aligned with shareholders’ interests and has a strong record of capital allocation. Their portfolios tend to be tilted towards smaller companies, where valuations are often lower, access to management better and market research coverage is poor, offering mispricing opportunities.
The transition from the existing portfolio to the new structure will be effected using a transition manager.
The Chairman of the Company, Susan Platts-Martin, said: “These changes follow an extensive search and evaluation process supported by external consultants looking at managers all over the world who invest across the Asia Pacific region. The Board is excited about the potential for the new managers to deliver good returns for Witan Pacific’s shareholders as well as for Matthews and Aberdeen to continue to build on the outperformance they have both delivered since they were appointed. Although performance can never be guaranteed, the new structure is expected to deliver a portfolio exposed to a fuller range of opportunities in the region, both geographically and across the size spectrum from mega-caps to smaller companies.
Witan Pacific’s multi-manager structure has allowed the Board to select four active managers, with distinct strategies, to look after different slices of the portfolio and aim to mitigate the volatility that might be experienced investing with a single manager or via a single strategy. The Company’s objective remains to deliver positive total returns for shareholders in excess of the returns of the regional benchmark index, paying attention to both capital growth and a growing dividend. The attention paid by all the managers to well managed companies with good franchises and secure balance sheets is expected to complement the Company’s aim of delivering dividend growth.”
WPC : Witan Pacific diversifies manager line up