While everyone craves outperforming the markets, recent Alliance Trust research shows that fewer investors today have the time - or appetite - to spend hours researching funds and equities. This is the case for the vast majority. 3 out of 4 investors said that they like investing but can’t spend too much time following stocks or markets.[1] Investors want the outcomes but no longer have the inclination to invest in the process.
This is, perhaps, not surprising, for a number of reasons.
The increasing complexity of choosing reliable equities in light of global economic uncertainty has made the task onerous, driven by factors from inflation to war to governmental and legislative change. Over half of the world’s entire population go to the polls this year, including India, USA and numerous emerging economies.[2]
Equally, the need for smarter solutions has further been accelerated by the sheer effort required to continually rebalance and diversify portfolios in line with constant global change; buying, selling and incurring costs (and potential CGT liabilities) in the process. A task, our research shows, few have the inclination for today; 2 out of 3 investors saying they prefer to buy and hold funds or equities for the long term.[1]
Instead, today’s DIY investor is looking for results-oriented, accessible solutions that provide us with the desired financial outcomes. As easily as possible.
The hunt for smarter solutions
In parallel with our private and business lives where we’re increasingly drawn to smarter solutions that save us time and effort, today’s investor is clearly in favour of ready-made equity solutions and smart options.
For this to work for investors, it’s critical that any equities solution scores on performance and value. Alliance Trust, one of the UK’s leading investment trusts, has a track record across both – and was recently recognised as the 2023 Investment Week Investment Company of the Year. Its aim is to deliver a real return over the long term through a unique global equity portfolio which invests across a range of diversified industries and sectors.
Outperformance
Alliance Trust’s performance is driven by the experience of ten world-class[3] fund managers with distinct, but complementary investment styles. Each ignores the benchmark and selects up to 20 global stocks they have the greatest confidence will perform over time.[4] A unique combination of high conviction ‘best ideas’ that is only available to UK investors through Alliance Trust. When almost 3 out of 4 active investors say they like investment funds that take the hassle out of investing₁, it’s perhaps not surprising that Alliance Trust is consistently one of the UK’s best-selling investment trusts.[5]
The resulting portfolio of just under 200 stocks is then strategically balanced by the trust’s investment manager, Willis Towers Watson. This approach not only provides investors with a unique, actively managed solution, it gives the portfolio strong potential to outperform its index.
The focus is on picking the best companies in the world, ensuring their investors aren’t taking bets on countries, sectors or investment styles.
Alliance Trust’s approach has led to impressive performance over time. Despite global volatility, the approach has seen investors enjoy 1 net year performance of 16.4%, 39.8% over 3 years and 73.8% over 5. Far exceeding its benchmark (the MSCI ACWI) over all periods (1 year: 10.9%, 3 years 28.9% and 5 years 67.6%).[6]
Diversification
Investors in Alliance Trust get the benefit of highly focused stock picking to increase potential outperformance versus the benchmark, while risk is spread for the investor by diversification not just at geographical level but at sector, industry and manager too.
Competitive cost
And while it's common for access to fund managers of their calibre to come at a premium that often eats into growth, that’s not the case for Alliance Trust. Our investment manager’s (WTW) scale in buying means access to Alliance Trust’s fund management excellence comes at a target OCR of just 0.65% p.a.[7] - far lower than many single and multi-manager charging levels.
Being an investment trust holds benefits for today’s investor
As a rule, investment trusts typically outperform unit trusts over time[8]. Partly because as an equity class they enjoy benefits other investments don’t. For one, Alliance Trust can employ gearing, allowing them to borrow to invest in lucrative opportunities for their investors as they arise. It’s also permitted to hold back 15% of its income each year, enabling it to reduce volatility. This has helped Alliance Trust pay a rising dividend to shareholders for 57 years in a row, something few equities can claim; qualifying it as an Association of Investment Companies (AIC) Dividend Hero.[9]
Past performance is not a reliable guide to future returns. Please note the value of investments and any income from them can go down as well as up. Your capital is at risk and you may not get back what you originally invested.
Towers Watson Investment Management Limited (“TWIM”), part of Willis Towers Watson, has approved this communication. This communication is intended for general information purposes only and it should not be considered a substitute for specific professional advice. In particular, its contents are not intended by Willis Towers Watson to be construed as the provision of investment, legal, accounting, tax or other professional advice or recommendations of any kind, or to form the basis of any decision to do or to refrain from doing anything. As such, this material should not be relied upon for investment or other financial decisions and no such decisions should be taken on the basis of its contents without seeking specific advice.
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