24 May 2018 Alliance Trust

Willis Towers Watson - A pioneering appointment

Alliance Trust broke new ground when it hired Willis Towers Watson (WTW) as its investment manager in April 2017. Although it has been well known and highly respected among institutional investors worldwide for decades, WTW was fairly new to the investment trust industry. Now, for the first time, it could bring its established track record to a much wider audience of wealth managers and retail investors in the form of a unique global equity portfolio containing only high conviction stocks.

Exceeding the Trust’s investment objectives

In performance terms, WTW has started well. Against the Trust’s investment objective (2% outperformance of the MSCI All Country World Index over rolling 3 year periods after costs) the equity portfolio has delivered outperformance of 2.6%1 in the 13 months since WTW’s appointment and driven total returns to shareholders of 19.2% in 2017.2

WTW’s size and global presence brings investors in the Trust advantages that many other investment managers cannot offer. With a research and portfolio management team numbering 120 (40 in equities alone), WTW’s primary goal is to identify managers who will deliver long-term value for their clients net of fees. If a product does not exist, they leverage their scale and industry leading position to work with managers to design solutions that meet the specific needs of their clients. They do this by structuring products with managers as well as negotiating fees. And so it was with Alliance Trust.

Although WTW has been successfully running similar strategies for institutional investors for some time, the one built for Alliance Trust is unique in the investment trust industry, where its commonplace to bolt together existing funds into a multi-manager structure. Alliance Trust’s portfolio is different, in that it comprises the highest conviction stocks of eight best-in-class managers (as rated by Willis Towers Watson) into a single, bespoke portfolio. Most of the eight are not otherwise available to UK retail investors.

In selecting the most appropriate equity managers for the Trust, WTW has drawn on its in-depth knowledge of over 1,500 equity managers Where traditional manager research approaches have tended to focus purely on quantitative analysis, WTW incorporates qualitative factors too. This emphasis on qualitative, as well as quantitative factors, is fundamental to the strength of their manager research process. Hundreds of research hours are spent by WTW reviewing success factors (see Figure x below). Aligning the Trust’s specific investment needs and objectives with the results of WTW’s research led to the appointment of Alliance Trust’s manager line-up - Bill Kanko, of Black Creek Investment Management, Pierre Py and Greg Herr, of First Pacific Advisors, Rajiv Jain, of GQG Partners, Ben Whitmore, of Jupiter Asset Management, Andrew Wellington, of Lyrical Asset Management, Hugh Sergeant, of River & Mercantile Asset Management, George Fraise, Gordon Marchand and Rob Rohn, of Sustainable Growth Advisers, and Andy Headley, of Veritas Asset Management.

Figure X: WTW manager research success factors: focus on qualitative due diligence

With $114bn3 of assets under management and $2.3trn4 under advice, WTW’s considerable global buying power enabled it to negotiate highly competitive fee levels with the eight chosen equity managers. As a result, Alliance Trust investors can now gain exposure to some of the world’s best-in-class5 equity managers for less than what many ‘off-the-shelf’ funds charge, supporting the Trust’s competitive pricing.

Building on past successes

Willis Towers Watson brings considerable experience - and success - in running similar concentrated equity portfolios for other (institutional) clients. Its Global Equity Focus Fund has outperformed the MSCI World Index by 2.7%6 and its Advisory Charitable Foundation fund has outperformed the MSCI All Country World index by an impressive 3.8%7. Few investment managers globally have practical experience of successfully running high-conviction multi-manager portfolios. Alliance Trust therefore represents a rare opportunity for investors to capitalise on this proven investment approach.

Performance of the Trust’s overall portfolio is managed by a WTW investment committee with a strong industry pedigree. The committee is responsible for driving outperformance of the portfolio, monitoring and overseeing individual manager performance, reviewing portfolio blending and risk balancing, implementing any hedging and gearing - as well as tight cost management.

The team is led by Craig Baker, Global Chief Investment Officer at WTW, with 22 years investment experience. He is supported, on the investment committee, by three senior industry professionals with complementary skills who together have 75 years of combined investment experience:

  • David Shapiro, Co-portfolio manager, with 23 years of investment experience, 17 of which as UK Equity Fund Manager.
  • Mark Davis, Co-portfolio manager, with 18 years of investment experience, currently Head of Portfolio Management for EMEA at WTW.
  • Stuart Gray, Senior Manager Researcher, with 12 years of investment experience, currently Head of Long-term Long Only Equity Manager Research at WTW.

The decision of the Alliance Trust Board to appoint WTW is proving well-made. Although early days for the new proposition, WTW’s delivery of outperformance to date for investors is highly encouraging, continuing Alliance Trust’s pioneering position in the investment sector. 

For full details of Alliance Trust’s performance – along with the Investment Manager’s monthly report, please visit alliancetrust.co.uk/price-and-performance



1. As at 30 April 2018. 
2. Past performance is not a reliable indicator of future returns.
3. AUM as at 31 December 2017
4. AUA as 1 January 2015
5. As defined by Willis Towers Watson
6. Data as at 31 March 2018. Performance is shown from the inception of the Towers Watson Global Equity Focus Fund (a Sub-Fund of Towers Watson Investment Management Ireland 1 plc) on 17 August 2015 to 20 March 2017 for Z Share Series (USD), sourced from BNY Mellon Fund Services (Ireland) Limited, 20 March 2017. From 21 March 2017, performance shown is for Non-Treaty USD Z Units of the Towers Watson Global Equity Focus Fund (a Sub-Fund of the Towers Watson Common Contractual Fund), sourced from Northern Trust International Fund Administration Services (Ireland) Limited. The Z Units do not bear Towers Watson 
Investment Management (TWIM) fees but are net of underlying manager fees and all expenses. TWIM Management fees for A Units are 25bps pa. Performance is based on monthly NAVs. 
7. Performance vs MSCI All Country World index from 1 October 2011 to 31 December 2017. Past performance is not a reliable indicator of future returns.

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