Investment trust insider on global trusts – James Carthew: Global funds can learn from Alliance Trust’s success
Our columnist says he is increasingly convinced Alliance Trust makes a ‘core’ holding for investors after its prgamatic multi-manager revamp seven years ago.
Last week I discussed how 2023’s markets were dominated by a ‘magnificent seven’ of mega-cap US stocks thought to be beneficiaries of the advances in artificial intelligence (AI). The MSCI All Countries World Index (MSCI ACWI) returned 15.3% over the year but the concentration of returns from just a handful of stocks made that a challenging target to beat.
In the global investment companies sector, there was a considerable spread of returns. Just five of 13 funds beat the index with Manchester & London (MNL) topping the peer group. However, ranking second with an underlying investment return of 21.6% and total share price return of 20.2% was Alliance Trust (ATST).
Since it adopted a multi-manager approach in April 2017 under Willis Towers Watson (WTW), Alliance Trust can point to both the net asset value (NAV) of its investments and the share price have beaten the MSCI ACWI benchmark. This is a remarkable turnaround for a trust that seemed to have lost its way. I wrote about the challenge that ATST faced at the time and noted that its fate would be judged solely on its future performance.
Back at the revamp, Alliance Trust had a market value of £2.5bn, but part of my concern was that its newly introduced commitment to keep the discount in low single figures would lead to… read more here