How Alliance Trust has fared since its strategy shake-up

TL;DR

Over the past six years, Alliance Trust has outperformed benchmarks in the Investment Trust sector and the wider peer group, despite facing challenges in beating the MSCI All Country World Index, which has been dominated by a few large technology companies. The trust aims to achieve a two percent annual outperformance over three-year rolling periods and remains confident in its ability to achieve this target in the long term.

Transcript

foreign hello and welcome to our latest Insider interview today in the studio I have with me Craig Baker of Alliance trust Craig thank you for coming in you're welcome we're six years on from Willis Towers Watson taking over Alliance trust and the structure being changed to a multi-manager approach how would you assess performance has gone yeah so ... Read More

Key Insights

• 👥 Alliance Trust has outperformed benchmarks and peer groups in the Investment Trust sector over the past six years.
• 💓 The dominance of a few large technology companies in the MSCI All Country World Index has made it challenging for Alliance Trust to beat this benchmark.
• 🫰 Over the past three years, Alliance Trust has significantly outperformed the index and the Investment Trust sector.
• 🤣 The trust aims to achieve a two percent annual outperformance over three-year rolling periods.
• ❓ Alliance Trust constantly evaluates the performance of its managers, whether they have underperformed or outperformed.
• 🍉 The neutral investment style of Alliance Trust provides advantages in terms of risk management and outperformance over the long term.
• 😐 The recent trend favoring value stocks over growth stocks has affected many managers, but Alliance Trust's neutral style has allowed it to adapt.
• 🍉 The outlook for Alliance Trust is positive in terms of bottom-up portfolio analysis, although cautiousness is maintained due to a discrepancy between bond and equity markets.

Questions & Answers

Q: How has Alliance Trust's performance been over the past six years?

Alliance Trust has outperformed benchmarks and peer groups in the Investment Trust sector, although it has faced challenges in beating the MSCI All Country World Index, which has been driven by a few large technology companies.

Q: What is Alliance Trust's aim in terms of performance?

The trust aims to achieve a two percent annual outperformance over three-year rolling periods.

Q: How has Alliance Trust performed over the last three years?

Over the last three years, Alliance Trust has significantly outperformed the MSCI All Country World Index, the Investment Trust sector, and the wider peer group.

Q: How does Alliance Trust evaluate and decide whether to continue investing with a full manager?

Alliance Trust constantly reviews all managers, both those who have underperformed and outperformed, to assess whether they have performed in line with expectations. If the trust is confident in the manager's proposition and nothing has changed, they may allocate more funds to underperforming managers and take profits from outperforming managers.

Q: How much of an advantage is it for Alliance Trust to have a neutral investment style?

Alliance Trust believes that being neutral in investment style is advantageous because it allows stock selection decisions to drive performance, delivering more return per unit of risk. Blending managers with different styles provides significant outperformance over the long term with a smoother ride.

Q: How has the recent trend favoring value stocks over growth stocks affected Alliance Trust?

The recent trend favoring value stocks over growth stocks has caused a significant change in the performance of value-oriented managers. The trust's neutral investment style has allowed it to outperform during this period. Energy stocks have been particularly beneficial, with companies like Exxon Mobil and Petrobras performing well.

Q: What is the outlook for Alliance Trust for the rest of the year?

From a bottom-up perspective, Alliance Trust is excited about the portfolio, as many stocks are producing better earnings than expected. However, there are concerns about the discrepancy between bond and equity markets. The trust is cautious and has reduced its gearing levels.

Q: Does Craig Baker personally invest in Alliance Trust?

Yes, Craig Baker personally invests in Alliance Trust.

Summary & Key Takeaways

• Alliance Trust has outperformed benchmarks and peer groups in the Investment Trust sector over the past six years.

• The trust has faced challenges in beating the MSCI All Country World Index due to the strong performance of a few large technology companies.

• Over the last three years, Alliance Trust has significantly outperformed the index and the Investment Trust sector.

• The trust aims to achieve a two percent annual outperformance over three-year rolling periods and remains confident in its ability to do so in the long term.