Fund Research: Alliance Trust plc

LAST UPDATE 15 JANUARY 2020

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.