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Fund Research: Alliance Trust plc

Alliance Trust (ATST) is one of the UK’s oldest and largest investment trusts.
Almost three years ago, on April 1 2017, the trust adopted a new approach which sees management of the portfolio outsourced to nine fund management groups in different parts of the world, each tasked with managing a portfolio comprised of a concentrated, bespoke selection of their fund managers’ best ideas. The management groups in this stable – many of them otherwise out of reach for ordinary investors – are selected and overseen by Willis Towers Watson (WTW), which manages allocations toward them so that performance is primarily driven by stock selection in the long run, rather than by sector, style or country weightings.

In August 2019 WTW brought a new fund manager onto the roster. Vulcan Value Partners, a manager that WTW has known and liked for many years, was added when Vulcan reopened for new capacity.

In the first two years under the new strategy, ATST has generated strong returns relative to both the benchmark and comparable open and closed-ended global peer groups. The past year in particular has seen the trust deliver impressive returns, benefiting from the blend of both growth and value managers which the portfolio contains as the market has rotated slightly to the latter.

ATST’s discount narrowed significantly around December 2016 when the trust announced the change in strategy. The trusts average discount in 2018 was 6% and the board continues to manage the discount, and is committed to buying back shares where necessary. Currently the trust trades at a discount of 4.1%, relatively wide in comparison to its peers.