Kepler Trust Intelligence - Analyst research note

We believe that ATST reflects a true ‘fire and forget’ equity portfolio, one which is best placed as a ‘core’ exposure in a portfolio. Ideally, this would be used by investors looking to increase their overall equity exposure without having to choose which specific style, region or sector to overweight. We believe ATST may be particularly attractive to long-term, low-turnover investors, as the responsibility for manager selection is effectively delegated to WTW, thus simultaneously removing any concerns about ‘style drift’ within the portfolio given WTW’s historical success in ensuring the trust has no style biases relative to benchmark.

We are also encouraged by the board’s own efforts in ensuring that ATST remains aligned to shareholder needs, further reinforcing the idea of its being a ‘core’ allocation. This has been shown through both the board’s continuing commitment to improving ATST’s ESG integration and the recent increases in the trust’s dividend profile.

We think that the major attraction of ATST is its ability to offer what WTW believes are amongst the best stock-pickers available to it. The current market environment has brought an end to the dominance of growth stocks, with WTW’s views on the dangers of market concentration being vindicated as a result. If this is the start of an unwinding of the historical headwinds that WTW’s style of investing has faced, then ATST may have the catalyst it needs to continue its outperformance. Once dominant style factors dissipate, this may give a chance for effective stock-picking to become the major driver of ATST’s portfolio returns.