- The trust uses a multi-manager approach to investing in companies across the globe
- The trust has increased the dividend it's paid to investors for the last 48 years in a row, although this is not a guarantee of future income
- Performance has been strong over the longer term but weaker recently due to the focus on growth managers
How it fits in a portfolio
Witan Investment Trust aims to generate an income and investment growth over the long term by investing in companies around the globe. The managers use a multi-manager approach, which means they invest in portfolios run by other fund managers and provide exposure to a mix of investment styles. Shares listed on stock exchanges are the key focus for this trust, but a small portion is invested in other assets such as property, fixed income, and higher-risk small and private companies. The trust could be used as a building block for a more adventurous portfolio or to provide broader global diversification.
Investors in closed-ended funds should be aware the trust can trade at a discount or premium to Net Asset Value (NAV).
Manager
The trust is managed by the Witan Executive team. Andrew Bell has been the trust’s CEO since 2010 and is responsible for the overall management of the trust. Bell has over 30 years’ investment experience and was previously Head of Research at Rensburg Sheppards. Alongside his duties at Witan, he is a Non-executive Director of The Diverse Income Trust plc.
Bell works closely with James Hart. He was appointed as Witan’s Investment Director in April 2015 and previously worked as a portfolio manager at Cayenne Asset Management. In the past he’s specialised in emerging markets and has experience in investment research and fund manager selection.
The Executive team works closely with Witan’s board to help decide which managers to invest with.
Process
The trust invests with a variety of fund managers, each with their own investment approach. To identify potential candidates for investment, Bell and Hart use both quantitative (number crunching) and qualitative (such as meeting fund managers) analysis and use the board’s large network of contacts. Bell and Hart are responsible for conducting this research. They then present what they believe to be the best candidates to the board, which ultimately has the final say on which managers make it into the trust.
Chosen managers must possess several key traits such as strong intellectual rigour and a deep understanding of their portfolio. The board’s extensive investment experience makes them well placed to judge fund managers on these factors. Typically, these managers construct high conviction portfolios using a clear and disciplined process. The companies they invest in tend to have sustainable long-term cash flows, the ability to grow faster than the market anticipates, or be undervalued.
These managers are blended to create a well-diversified portfolio. Most of the trust, around 75%, is invested in 6 ‘Core’ funds, 5 of which take a global approach. The exception is Derek Stuart from Artemis who invests solely in the UK. The remainder of the trust, around 25%, is invested in ‘Specialist’ funds which provide exposure to more niche areas such as higher-risk emerging markets, climate change and life sciences.
Bell and Hart don’t impose restrictions on the managers as this could interfere with their process, but they don’t allow them to borrow money to invest or use hedging techniques. Investments in any one manager won’t usually exceed 20% of the trust’s assets.
Around 37% of the trust is currently invested in North America, which is much lower than its global stock market weighting. 19% is invested in the UK, 21% in Europe, and a further 8% in Asia and Japan. The trust is invested across a range of sectors, including industrials, technology, consumer staples and healthcare.
The managers of the trust haven’t added or removed a manager since August 2020 when they added WCM Investment Management and Jennison Associates. However, over the last 12 months the managers have been reallocating the ‘core’ portfolio. The investments with Lansdowne Partners and Veritas Asset Management were trimmed after both managers were close to having 20% of the trust’s assets. This was used to fund additions to Jennison following weakness in the first half of 2022, as well as adding to GMO Climate Change in the ‘specialist’ part of the portfolio, again after a period of market weakness.
While the underlying managers can’t use gearing (borrowing to invest), the trust itself can. As at the end of May gearing stood at 14.8%. This can amplify returns but also increase losses which adds risk. The managers can use derivatives to help them invest, which if used also adds risk.
Please note the trust currently holds shares in Hargreaves Lansdown PLC.
Culture
Witan was founded over a hundred years ago in 1909. It was set up initially to manage the estate of the first Lord Faringdon. From 1934 its investments were managed by Henderson Administration, but in 2004 it became self-managed and changed to its present ‘multi-manager’ strategy. It has since continued to evolve and gradually moved away from being more UK-centric to a more global approach.
ESG integration
In February 2020 the trust signed up to the UN Principles for Responsible Investment (UN PRI), which commits large investors to six principles regarding environmental, social and governance (ESG) matters. All the trust’s underlying managers are also signatories. Witan is also a signatory to the net zero asset managers initiative, which is a commitment to be net zero by 2050. Over time, the team wants to see all underlying managers commit to the same initiative.
The managers have heightened their focus on ESG integration in recent years, with Hart taking the lead on building this out. For example, they now have an annual ESG due diligence meeting with all underlying managers and discuss any ESG issues in the portfolio, the stewardship structure of the underlying companies and any company engagement, amongst other things. They have committed to only investing in companies that are sustainable from an ESG perspective by 2030 – Hart is in the process of developing a framework to assess this.
Importantly, this trust will not become a negatively screened portfolio by applying exclusions to entire sectors. This is because the managers believe there are benefits to investing in companies that are changing for good.
Cost
The trust’s net ongoing charge is 1.56%. This includes an annual management charge and a performance fee which can reduce investors’ returns. If held in a SIPP or ISA the HL platform fee of 0.45% (capped at £200 for a SIPP and £45 for an ISA) per annum also applies. Our platform fee doesn’t apply if held in a Fund and Share Account.
Investors should refer to the latest annual reports and accounts and Key Investor Information for details of the risks and charging structure. Investment trusts trade like shares, both a buy and sell instruction will be subject to the HL share dealing charges within any Hargreaves Lansdown account.
Performance
Over the last 10 years, the trust has generated returns of 189.06%* compared with 168.62% for the average trust in the AIC Investment Trust Global sector. During the same time the fund's NAV has increased by 174.02%. That said, the trust has been through a few tough periods in recent years, and past performance isn’t a guide to future returns.
The trust has lagged its benchmark since the end of 2022, due to its tilt towards the growth investment style. Higher inflation and rising interest rates have put pressure on growth investing, as this erodes the value of cashflows expected to be generated further in the future. Value-focused trusts, which invest in low-valued or recovering businesses, have performed better.
Only three of the trust’s managers managed to outperform their benchmarks over the trust’s financial year. These were GMO climate change, Lansdowne and Lindsell Train. On the other hand, the key underperformer was Jennison whose portfolio is exposed to more long-term growth companies. WCM also underperformed for similar reasons. Artemis underperformed the UK market due to its longstanding concentration of investment in mid-cap companies.
The trust’s directly held investments also detracted over the trust’s financial year. Princess Private Equity fell sharply after unexpectedly cancelling their second dividend in 2022, hitting investor confidence. But on the positive side BlackRock World Mining performed strongly off the back of higher commodity prices.
The trust has an impressive income track record and has increased the dividend its paid to shareholders for 48 consecutive years. At the time of writing the trust trades at a discount to NAV of 8.69% and yields 2.51%, although remember yields are variable and not guaranteed or a reliable indicator of future income.
Annual percentage growth
| May 18 – May 19 | May 19 – May 20 | May 20 – May 21 | May 21 – May 22 | May 22 – May 23 | |
| Witan Investment Trust PLC | -3.23% | -12.23% | 39.85% | -6.54% | 6.61% |
| AIC Investment Trust - Global | 2.87% | -0.46% | 29.02% | -9.80% | 4.02% |
Past performance is not a guide to the future. Source: *Lipper IM to 31/05/2023.
Find out more about Witan Investment Trust including charges
Witan Investment Trust Key Investor Information
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