Faith Glasgow, Financial Times, December 7 2024:
Making professional investment decisions on the basis of calls on markets, sectors or investment styles is a mug’s game. That is the suggestion of Craig Baker, global chief investment officer at insurer and institutional investor Willis Towers Watson (WTW), which oversees the recently merged £5bn investment trust Alliance Witan (ALW).
“It’s pointless to call views on one market versus another, or different sectors or industries. Stock selection is the only way over the long term,” Baker says.
Baker has been well known to Alliance Trust investors as lead portfolio manager since 2017, when WTW took over management of the then struggling trust’s portfolio and turned it around using a team of external specialist managers. So the merger with Witan — like Alliance, a large global generalist trust, well over 100 years old and run on a multi-manager basis — has been this year’s big event in the investment trust world.
Why is he so “anti-macro”? “The problem with big top-down market bets is that there isn’t much breadth to the decisions,” he explains. “The outcomes can be quite binary, so over the long term there can be long periods where you do either incredibly well or incredibly badly, depending on whether or not your bet paid off.”
Such bets are inherently prey to uncertainty. Wars, Covid-19, the threat of cyber attack, the global migrant crisis and, more recently, the potential for trade wars under US president-elect Donald Trump, have made the world a less predictable place. And top-down calls on market segments, whether different styles, company sizes or specific sectors, are equally challenging..
James Carthew, head of investment companies at QuotedData, says Alliance has long been his go-to suggestion for global equity trusts, and ALW remains his favourite post-merger.
“The only thing it could not be expected to contend with is the mania for the Magnificent Seven megacap stocks that have dominated indices over the past couple of years,” he adds. “If you want to make judgments about growth versus value, bet on AI, or prefer a trust that gives you exposure to multiple asset classes — there are other options.”
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