Find out more about Alliance Trust’s performance, with the help of market commentary from our Investment Manager.
For the month of May, the Trust’s Total Shareholder Return and NAV Total Return were 3.4% and 6.7% respectively, with the benchmark MSCI All Country World Index (ACWI) returning 6.5%.
Graphics Processing Unit designer nVIDIA was the largest positive contributor to the Trust’s performance over the month, delivering a return of 23.5%. The company’s May earning report showed revenues up 39% on the previous year, with nVIDIA citing significantly higher demand for computing, AI and online gaming amidst the Coronavirus pandemic. The biggest detractor from performance was AIA Group, returning -10.5%. The stock of the largest publicly-listed life insurance company in Asia suffered as the group reported a 27% fall in value of new business in the first quarter, with the coronavirus pandemic hurting sales in its major markets of Hong Kong and mainland China. However, despite losses in May, the outlook for the company is appearing to improve as infection rates continue to decline across Asia.
In terms of stock selection activity, the Trust’s position in new holding Bureau Veritas, initiated in April, was increased. The company’s primary activities involve testing products or materials, inspecting sites/ equipment, and certifying products and systems to maintain various global standards. The company has seen an exponential rise in demand from international governments to implement nationwide medical tests for COVID-19. Following a strong performance over March and April, the Trust’s remaining position (purchased on 18 March) in global sportswear company Nike was fully liquidated in May.
The Trust benefited from the continued market rebound through May. We continue to maintain a cautious outlook due to the uncertainty around returning to ‘business as usual’ and so towards the end of May, we reduced the Trust’s gross gearing, which stands at 6% at the end of the month. Additionally, we conducted some minor portfolio rebalancing, adding to larger cap exposure with a view to increasing resilience in the portfolio.
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Alliance Trust has been awarded the AIC’s Dividend Hero award and is proud to have increased its dividend every year for over 50 years. This award is made by the Association of Investment Companies to the small number of investment companies who have increased their dividends each year for 20 years or more. For more information and a full list of qualifying companies, you can visit the AIC website.
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