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Analysts Upgrade Alliance Trust

After a number of meetings with key personnel at Willis Towers Watson and ongoing due diligence analysts have upgraded Alliance Trust

David Holder 20 July, 2018 | 2:30PM



David Holder: Alliance Trust (ATST) seeks to be a core investment proposition for investors seeking long term real returns via growth in capital and income. In April 2017 after a comprehensive strategic review, the Board tasked Willis Towers Watson to manage the Trust’s assets, with an objective of outperforming the MSCI All Country Index by 2% net of fees on an annualized three-year rolling basis.

After a number of meetings with key personnel at Willis Towers Watson and ongoing due diligence we recently upgraded the Morningstar Analyst rating from Neutral to Bronze. Our increased conviction stems from a number sources; most notably the rigorous nature of the manager selection and portfolio construction process, the depth and experience of the team and the competitive fees. 

The approach applied by Willis Towers Watson is innovative and brings a hitherto institutionally structured investment approach to the retail market. Through their extensive global manager research platform they seek to identify the most talented global stock pickers, many of whom are not available to the UK retail market.

These managers then provide only their highest conviction stock ideas. The portfolio managers then blend these 8 or so managers together using a combination of quantitative optimisation tools and a qualitative overlay. At the outset the choice of highly differentiated underlying managers ensures that stock overlaps are rare.

The resultant portfolio is designed to be closely aligned with the MSCI All Country World Index in terms of geographic and sector biases with the concept being that the pure stock picking ability of these exceptional managers is isolated and inadvertent sector and country bets are minimalised.

Since Willis Towers Watson’s appointment here in April 2017 the fund has outperformed. It is too soon to draw meaningful conclusions from these numbers, but investors can take comfort in the longer-term record of similarly managed Willis Towers Watson strategies   

The investment committee overseeing this portfolio includes Craig Baker, David Shapiro, Mark Davis and Stuart Gray. Craig Baker joined Willis Towers Watson in 1994 and is Global CIO and has ultimate responsibility for all aspects of the Willis Towers Watson investment philosophy and process. He heads up a portfolio management team that numbers 30 and a global research platform of around 120 personnel.

Finally, the board seek to limit annual ongoing charges to a maximum of 0.65% which mean that investors pay a very competitive fee when compared to the funds Morningstar category.

We believe that the appointment of Willis Towers Watson brings much promise for investors. We have seen sufficient evidence of the approach to believe that this is a far improved proposition for investors combining as it does highly active investment management and low fees. Our conviction is consequently buoyed, and we have upgraded Alliance Trust to a Morningstar Analyst Rating of Bronze, having previously been Neutral-rated.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Alliance Trust Ord805.00 GBX-0.12

About Author

David Holder  is a senior investment research analyst at Morningstar

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