Analyst research note – Kepler Trust Intelligence

Update: 25 May 2021

Alliance Trust (ATST) follows a well-diversified approach to global equity investing, while still retaining the benefits of active management. ATST’s management has been delegated to Willis Towers Watson (WTW), the global investment consultancy. WTW brings with it a huge depth of resources, whereby 4,000 researched equity long only asset managers are condensed into a list of 20 potential managers, those which WTW deems to be both best in class and skilled at managing concentrated portfolios. For ATST’s portfolio, WTW currently utilises 10 of these managers blended with complementary styles in such a way as to diversify away the vast majority of factor, sector and regional risks relative to benchmark while still retaining the benefits of active management, as demonstrated by the trust’s high active share.

ATST’s portfolio is a unique combination of managers, as each manager invests in a customised portfolio of highest-conviction stocks, as opposed to replicating an existing strategy. ATST offers retail investors one of the few ways they can access some of the underlying managers, given their services are often not available to UK investors. Likewise, WTW’s advisory investment services are also typically reserved for large professional clients.

ATST’s long-term performance has kept pace with global markets, while its performance over the last 12 months has been strong, with the trust outperforming both its benchmark and peers. We cover this in more detail in our Performance section. ATST also has one of the longest track records of dividend increases of any investment trust. Shareholders have recently voted to approve a change in its reserve structure, which may lead to a potential dividend cover of 19x, providing it with enormous support for future dividend payments.