Alliance Trust’s equity portfolio underperformed in 2018

Alliance Trust - ATST

Alliance Trust’s equity portfolio underperformed in 2018 – Alliance Trust has published results for 2018. Highlights were:

  • Total shareholder return for 2018 was -6.1% (2017: 19.2%) and its share price at 31 December 2018 was 688.0p, down 7.8% compared to 746.5p at 31 December 2017
  • NAV total return for 2018 was -5.4% (2017:18.5%) and its NAV per share at 31 December 2018 was 723.6p, down 7.0% from 777.7p at 31 December 2017
  • The equity portfolio total return remains ahead of its benchmark since the adoption of the current investment approach on 1 April 2017, outperforming the MSCI All Country World Index by a cumulative 1%. Its performance in 2018 was -4.2% against -3.3% for the index.
  • The ongoing charges ratio for 2018 was 0.65%. The increase versus the previous year reflects a full year of Willis Towers Watson’s fees and fixed costs rising as a proportion of a smaller asset base
  • The trust bought back 14.0m shares in 2018. This compares to 145.1m shares in 2017 (which included the purchase of 95.5m shares from Elliott)
  • The year began with the shares trading at a discount of 4.0% and ended at a discount of 4.9%
  • It raised its total ordinary dividend for 2018 by 3.0% to 13.55p, compared with a total ordinary dividend for 2017 of 13.16p, marking the 52nd consecutive annual increase

Lord Smith of Kelvin, chairman, commented: “2018 was a challenging year for global equities with most markets falling and many active managers struggling to outperform. Like others, we trailed our benchmark, partly due to market returns during much of the year having been driven by a narrow group of very large companies. Our strategy of appointing a number of managers with different styles and approaches to select their best stocks means we will never have a very concentrated exposure to one segment of the market. By investing more broadly across companies, countries and sectors, we should avoid the short-term performance highs and lows driven by particular market factors. In the long run, though, we expect our portfolio to outperform the market. Meanwhile, we continued to provide investors with income by increasing our dividend, which has now risen every year for 52 consecutive years.

During the year, we made further progress towards simplifying our business by disposing of many of our remaining non-core investments, and we are in the process of selling, subject to regulatory approval, our subsidiary, Alliance Trust Savings, to Interactive Investor Limited. The rationalisation of our holdings will enable us to focus on global equities which at year-end represented over 97% of our assets. We are clear on the direction of the Trust and that it will continue to prove a wise choice as a core investment for the long term“.

ATST : Alliance Trust’s equity portfolio underperformed in 2018

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