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23 July 2021 Interim Report, Performance, About Alliance Trust, Company News Alliance Trust

Chairman's Statement

2021 Interim Report

  • For the six months to 30 June 2021, the Company’s Net Asset Value (NAV) Total Return was 14.8% outperforming its benchmark, the MSCI All Country World Index (MSCI ACWI) which returned 11.1%
  • The Company’s Total Shareholder Return (TSR) of 11.1% reflected a widening of the discount from 3.5% at the start of the year to 6.7% at the end of June
  • Between 1 April 2017, when WTW was appointed Investment Manager, and 30 June 2021, the Company’s NAV Total Return and TSR were 58.4% and 56.6% respectively, against 57.2% for the benchmark
  • A second quarterly dividend of 3.702p, an increase of 3% on last year, will be paid in September and the Board expects to extend the Company’s 54-year track record of increasing ordinary dividends
  • The Board is reviewing the level and funding of the Company’s dividend to assess if and how a more attractive and sustainable level of distributions may be provided to shareholders in the future
  • Reflecting our goal of transitioning the portfolio to net zero greenhouse gas emissions by 2050, we will be introducing exclusions on investing in stocks with significant exposure to thermal coal and tar sands


The Covid-19 pandemic continues to overshadow the way we live and work, but we are hopeful that the global rollout of effective vaccines and further easing of restrictions means we are one step closer to returning to some form of normality. In the first six months of this year, as the global economy has gradually reopened, equity markets have delivered robust returns and I am pleased to report that the Company’s portfolio has comfortably outperformed the market.

The Company’s Net Asset Value (NAV) Total Return for the six months to 30 June 2021 was 14.8% compared to 11.1% for its benchmark index, the MSCI ACWI. The Company’s Total Shareholder Return (TSR) was slightly lower than the NAV Total Return due to movement in the discount, which widened to 6.7% from 3.5% (average 5.9%) in the period. We have also seen the Company’s total net assets rise from £3.0bn at the end December last year to £3.3bn at 30 June. Our multi-manager approach is also delivering over a longer period and since 1 April 2017, when we adopted this strategy, the NAV Total Return and TSR are 58.4% and 56.6% respectively, compared to 57.2% for the benchmark.

The portfolio’s outperformance of the index was due to strong stock selection in a global market whiCh is now offering much more opportunity for active managers to add value. Now that the market returns are broadening out and the index appears to be less skewed towards large US technology stocks, the Company is beginning to once again see the benefit of its active high conviction stock selection approach in the returns being delivered, which are above those of funds which simply track the index.


We have today announced the Company’s second interim dividend for 2021 of 3.702p, an increase of 3% on the payment for the same time last year. The Board is proud that the Company has been able to increase its total ordinary dividend for 54 consecutive years. It remains committed to the Company’s Dividend Policy and expects to build on that track record. The Board is also aware that dividend income is important to many of its shareholders and now wishes to assess if and how a more attractive and sustainable level of distributions may be provided to shareholders in the future.

With the global economy re-opening, we expect income from the portfolio to increase over time, following the sharp decline experienced during the pandemic. In addition, the Board is delighted to have been granted Court approval for the conversion of the Company’s merger reserve into a distributable reserve. This provides the Company with increased flexibility in the way it can fund dividend payments, boosting the Company’s already significant distributable reserves and dividend cover.

In light of these developments, the Board has started a review of the level and funding of the Company’s dividend payments and would welcome the views of shareholders. The Board will examine if and how the Company could deliver a more attractive and sustainable level of dividend to shareholders, without changing the Company’s investment strategy. We will report back to shareholders on the results of this exercise by the end of October.


We reinforced our commitment to investing responsibly this year by deciding to transition our portfolio to net zero greenhouse gas emissions by 2050. Reflecting this commitment, we have decided to exclude stocks with significant exposure to thermal coal and tar sands from the portfolio.

Climate change is one of the defining issues of our times and we are pleased that WTW is at the forefront of developing and implementing the highest standards of environmental best practice in the investment industry.

Our Investment Manager, WTW, has over 70 experts focusing exclusively on the risks of climate change. It is a signatory to the Net Zero Asset Managers Initiative (as well as the Principles for Responsible Investment and the UK Stewardship Code). We will closely monitor and report to you on progress, as well as continuing to update you on a quarterly basis on the voting and engagement activities of our Stock Pickers across the broad range of Environmental, Social and Governance (ESG) aspects of the portfolio.


The Company started 2021 with gross gearing of 10%. The gearing levels were managed effectively within the guidelines set by the Board throughout the first six months of 2021. Gearing has been maintained at around this  level, with gross gearing of 9.7% at the period end. This reflects our Investment Manager’s positive central view of equity markets but recognises the significant uncertainty about the impact of the pandemic on the global economy.


Expenses at the half year are around the same level as at this point last year. Investment management fees were higher reflecting a higher average NAV for the period. Other ongoing costs were slightly lower reflecting cost savings we have achieved. The Company’s Ongoing Charges Ratio as at 31 December 2020 was 0.64% which is competitive for an actively managed, multi-manager investment fund. We continue to look at where we can achieve operational efficiency and where possible, achieve savings in our costs.


Our average discount for the period was 5.9% starting at 3.5% and ending at 6.7% on 30 June. To support our management of the discount, we purchased 7.3m shares at a cost of £68.1m in the period.


I chaired my second AGM of the Company in April this year. I was disappointed that, yet again, due to necessary Government restrictions, the meeting took place with only myself and our Company Secretary present. I had very much wished to see as many of our shareholders as possible attending, so that I could meet with you and hear your views in person. However, I was pleased that this year shareholders were able to view the meeting electronically and ask questions.

We do not know when we will be able to host ‘normal’ public meetings again but when we plan for next year our intention is to hold a meeting that shareholders can physically attend as well as to provide a facility so that shareholders can, if they so choose, view the meeting remotely.

We also plan to hold a number of virtual meetings in the course of this year to allow you to hear directly from our Investment Manager and Stock Pickers. If possible, we will hold a live event that shareholders will be able to attend in person. Details of all these events will be available on our website,, and we will send electronic invitations to all shareholders who have provided us with their contact details.


I am delighted that at the AGM shareholders confirmed the appointment of Sarah Bates and Dean Buckley as Directors. As planned, Sarah has now taken on the role of Senior Independent Director after Karl Sternberg stepped down from the Board at the end of June. Chris Samuel, who joined the Board at the same time as Karl in 2015, will not be seeking re-election at our AGM in April 2022. Both Karl and Chris stepping down from the Board is part of our orderly succession planning and, as we continue to refresh the membership of the Board, we will be looking to take the opportunity to widen the diversity of the Board. I would like to reiterate my thanks to Karl for the significant contribution he made to the Board.


Although great progress has been made in some countries, vaccination globally is uneven and new variants of the virus mean the Covid-19 crisis is far from over. Extremely low interest rates and massive fiscal stimulus by governments are helping to generate an economic recovery, but they could also lead to a sustained rise in inflation. It’s equally possible that the recovery could falter and inflationary pressures abate if measures to control the virus lead to new restrictions on economic activity. Given the risks and wide range of potential outcomes, we believe the best results will be achieved by focusing on stock picking rather than trying to time markets and macro factors. If the recovery continues to broaden out, we believe it will provide attractive opportunities for our Stock Pickers to continue adding value, as they did in the first half of the year.

Gregor Stewart, Chairman

22 July 2021

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