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Witan Investment Trust - investing in the experience of others

Jonathon Curtis, Investment Analyst, reports on Witan Investment Trust after it released its annual results to 31 December 2018.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

  • Andrew Bell thinks investing favours patience and thinking differently from other investors
  • The share price fell 8.1% over the 12 months to 31 December 2018
  • NAV fell 8.4% compared with a 6.5% fall for the benchmark
  • A total 23.5p dividend will be paid – variable and not a reliable indicator of future income.

Witan Investment Trust focuses on both income and long-term growth. Manager Andrew Bell mostly invests in funds run by other managers with strong track records. He tries to blend managers with a range of investing styles so they’ll perform differently in different market environments. This gives the trust plenty of diversification and could reduce volatility.

Between the fund managers they invest in companies across the globe. Roughly a third is invested in the UK and a quarter in the US. The remainder is in both developed markets like Germany and Japan, and higher-risk emerging markets like China and India.

There is currently a core group of ten experienced managers who invest money on behalf of the trust. A small amount is invested directly in UK companies from sectors such as private equity, life sciences and biotechnology, and mining.

Most of the portfolio is invested in large companies, but some of the managers also invest in higher-risk smaller companies. The trust’s manager borrows money to invest (gearing) and can use derivatives to help him invest, both of which add risk. The trust carries a performance fee, details of which can be found in the annual report.

How's the trust performed?

In the 12 months to 31 December 2018 the trust’s NAV fell 8.4% and its share price dropped 8.1%. The benchmark fell 6.5%. More recently the trust’s performance has been positive, though this is a short time period, and past performance isn’t a guide to the future.

A fourth interim dividend of 7.75p was declared in February 2019 bringing the total dividend for the period to 23.5p. This is 11.9% more than last year. These figures aren’t a reliable indicator of future dividends, and income isn’t guaranteed.

Annual percentage growth
Feb 14 -
Feb 15
Feb 15 -
Feb 16
Feb 16 -
Feb 17
Feb 17 -
Feb 18
Feb 18 -
Feb 19
Witan Investment Trust 26.2% -10.1% 33.2% 6.6% 4.1%

Past performance is not a guide to the future.Source: Lipper IM to 31/03/2019

Many of the trust’s managers struggled during 2018’s volatile markets. Six of the ten managers did worse than their benchmarks over the year. Of the four managers who did better than their benchmarks, only Veritas made money. The other three lost less money than their benchmarks.

The direct investments portfolio performed well. This was largely driven by specialist life sciences company Syncona. It successfully backed a portfolio of new UK-based cell and gene therapy businesses. A new investment was also made into a global equity fund run by Latitude Investment Management. Andrew Bell thinks it’s got good potential for future growth.

Manager's outlook

Although recent performance has been disappointing, Bell focuses on the long-term. He thinks investors’ mood is improving after concerns about market volatility, the threat of a US-China trade war and Brexit. He thinks investor sentiment will further improve if global interest rates remain low, which he thinks is likely. Bell believes this could lead to good performance in 2019, especially after the falls in 2018.

Even though nearly a third of the trust is invested in UK companies, he doesn’t share the same worries about the UK as many other investors. That’s because most of the money made by the UK companies is earned abroad. He thinks a long-term approach and the ability to think differently from the crowd will lead to strong performance, although there are no guarantees.

Key Information Document

More on this trust, including charges

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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