Witan Investment Trust announced its final results for the year ended 31 December 2022. While performance improved in the back half of the year, the company underperformed over the 12 month period, with the share price down -9.8% compared to a benchmark return of -6.2%. NAV fell 10.3% while the discount was 5.4%. Management acknowledged that it was a challenging year for performance, however, did note some green shoots, with 2023 NAV total return to 10 March of +5.6%, 3.6% ahead of the benchmark total return of 2.0%.
Management hopes that 2022 closes out the end of a rough stretch for the company, however, note that long-term returns remain positive:
”Even after the underperformance since 2020, over the ten years to the end of 2022 Witan achieved a NAV total return of 159% and a share price total return of 180%, compared with the benchmark’s 158% return and (with inflation now back on investors’ radar) well ahead of the 30% rise in the UK CPI over the period.”
CEO Andrew Bell had this to say about the outlook:
”2023 began with interest rates and economies poised close to potential turning points. In the case of rates, after a flurry of increases in late 2022 we may be near a peak, even if the shape is likely to be more like Table Mountain than the Matterhorn. After a decade or more of zero or negative rates, central banks will be keen to retain more normal levels of interest rates, quite apart from continuing to bear down on inflationary pressures, which may be waning but have not disappeared. In the case of economies, stagnation or moderate recession is widely forecast for part of 2023 but the interesting question is when the headwinds from energy prices wane and the tailwind from China’s reopening quickens, helping engender a cyclical recovery.
”China’s abandonment of its zero-Covid policy and likely economic acceleration this year is a significant offset to the expected slowdown elsewhere. China’s slowdown in 2022 fortuitously blunted the inflationary impact from commodities and gave supply chains time to normalise but at the cost of a dramatic slowing in its own growth rate. Pent-up demand, a restoration of industrial production and determined government efforts to end the slump in China’s property sector are likely to mean the world’s second largest economy is the only major centre to pick up speed in 2023, mitigating the weakness elsewhere.”
WTAN : Hopeful outlook after tough year for Witan Investment Trust