by Val Cipriani, Investors Chronicle, March 14, 2024:
Global investment trust giant Alliance Trust (ATST) could face headwinds if the market’s enthusiasm for the so-called Magnificent Seven stocks were to cool down, analysts have warned. But the trust’s recent outperformance was also propelled by strong stockpicking in other areas of the market.
Alliance’s shares returned 21.2 per cent in the year to 8 March, well ahead of the 14.1 per cent delivered by its benchmark, the MSCI All Country World Index. As of 31 January 2024, the trust had 14.6 per cent of its portfolio in five of the Magnificent Seven stocks, excluding Tesla (US:TSLA) and Apple (US:AAPL), against a roughly 17 per cent exposure for the All Country World index.
“We are always wary of ‘bubbles’ and assume at some point the market will dramatically shift away from the Magnificent Seven and similar companies, with this likely to have a negative impact on Alliance’s performance,” said analysts at Stifel.
But Mick Gilligan, head of managed portfolio services at Killik & Co, said the trust’s Magnificent Seven exposure had come naturally, as a result of a multi-manager strategy in which 10 stockpickers with different styles run concentrated strategies of 10 to 20 stocks. The trust seeks to outperform the index through stockpicking only, and is by design neutral in style, country and sector…
James Carthew, head of investment companies at QuotedData, said that “it cannot be stressed enough how difficult it was for an actively managed portfolio to outperform the global equity index last year” without full exposure to the Magnificent Seven.
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