Over the past five years Witan Investment Trust (WTAN) has enjoyed a steady uptick in performance, particularly over 2013, 2014 and the first half of last year. This was triggered by the appointment of a new chief executive officer in 2010, Andrew Bell. As a result, the IC Top 100 Fund's double-digit discount to net asset value (NAV) steadily tightened so that it was trading on a slight premium for much of last year.
- Strong long-term performance
- Relatively wide discount
- Diversified portfolio
- Discount control
- Short-term underperformance
Witan outsources more than 90 per cent of its portfolio to 12 external managers, and is also well-diversified in terms of geography and sector. It has also raised its dividend every year for 41 years, and for 2015 paid a total dividend of 17p, up from 15.4p in 2014 - an increase of 10.4 per cent.
It has a reasonable ongoing charge of just over 1 per cent making it a good long-term core holding for many types of investors.
However, recently the trust has swung out to a discount of more than 5 per cent - its widest in around four years. But rather than something to be alarmed about, this may present an opportunity for long-term investors.
Reasons for the discount widening, according to broker Stifel, include the selling off Witan and other investment trusts by private investors wanting to move into less volatile assets amid the recent market falls.
Charles Cade, head of investment companies research at Numis Securities, adds: "This trust has been one of the stronger performers over the past few years and Witan's in-house investment team has added value since taking over in 2010, but it has a bit of gearing (debt) and its portfolio includes exposure to private equity, things people may get worried about during periods of market volatility. Private investors tend to pull back from these areas in these conditions so that discount widening happens."
The trust has a strong long-term record-beating broad indices such as FTSE World ex UK and the Association of Investment Companies (AIC) Global sector average in share price terms over three and five years, and the FTSE All-Share over one, three and five.
But over one year, it underperforms FTSE All World ex UK falling 6.8 per cent against a fall of 2 per cent for the index.
However, in terms of NAV returns it is only slightly behind this index, down 2.9 per cent. "Over one year it is very much in line, and there will be differences over a period when there are pretty turbulent markets - it is not an ultra defensive trust," says Mr Cade. "Its underlying managers are good, but have a mixture of different styles. However, when markets pick up, Witan is likely to outperform."
The trust also has a policy of achieving a discount below 10 per cent and will buy back shares taking account of prevailing market conditions. It has been buying shares over the past few days. "In practice, it appears keen to keep the discount in at 5 per cent or less," says Mr Cade.
So there is less danger of the trust swinging out to a wider discount, and if its performance and market sentiment improve, the discount could tighten again. "We would be surprised to see its discount widen much further from current levels as the trust has used its buyback programme in the recent past to moderate discount volatility," adds Simon Elliott, head of the investment trust research team at Winterflood.
So if you want exposure to a global portfolio diversified both in terms of managers and assets, with the potential to deliver strong long-term returns, now could be an opportune moment to add or buy Witan Investment Trust.
WITAN INVESTMENT TRUST (WTAN) | |||
---|---|---|---|
PRICE | 713p | GEARING | 13% |
AIC SECTOR | Global | NAV | 741.5p |
FUND TYPE | Investment trust | YIELD | 2.60% |
MARKET CAP | £1.4bn | ONGOING CHARGE | 1.02% |
PRICE DISCOUNTTO NAV | 5.22% | SET UP DATE | 17 Feb 1909 |
12-MONTH AVERAGE DISCOUNT | 0.07% | MORE DETAILS | www.witan.com |
Source: Morningstar
Performance
1-year share price return (%) | 3-year cumulative share price return (%) | 5-year cumulative share price return (%) | 10-year cumulative share price return (%) | |
---|---|---|---|---|
Witan | -6.8 | 30.8 | 57.1 | 112.3 |
AIC Global sector average | -5.7 | 17.6 | 31.0 | 70.9 |
FTSE World Ex UK TR GBP | -2.0 | 27.0 | 48.4 | 92.8 |
FTSE All Share TR GBP | -7.9 | 9.9 | 26.7 | 57.3 |
Source: Morningstar as at 22 February 2016
Top 10 Holdings*, as at 31 January 2015 (%)
Comcast | 1.6 |
---|---|
SVG | 1.5 |
Diageo | 1.5 |
Unilever | 1.4 |
Princess Private Equity | 1.4 |
London Stock Exchange | 1.3 |
Relx | 1.3 |
Apax Global | 1.2 |
Sage | 1.2 |
BT | 1.2 |
*On a look through basis across managers excluding open-ended funds
Geographic Breakdown
UK | 42 |
---|---|
North America | 25 |
Europe | 16 |
Asia ex Japan | 10 |
Japan | 5 |
Other | 2 |