Eight out of 10 external managers outperformed as the trust as it registered a NAV total return of 16.7% versus, 11.4% from its benchmark. A key holding was 3i Group – the largest at the end of 2012 – which delivered returns of more than 50%.
Exposure to was raised from 1% to 7% during the period, with the appointment of Matthews International Capital Management to manage Asian equities exposure.
“About a year ago we began to think that the market had become cheap enough that if something were to change in the way they governed themselves, then we’d be vulnerable because we had very little exposure. And this was six months before Abe came to power,” said CEO Andrew Bell.
“So at the beginning of the year we had a number of things that were set in train to try and change that, the first one of which was to appoint a manager in the Far East who was able to hold Japanese stocks as well as just mainland Asian stocks, so that was Matthews, and that increased our weighting by 2% in Japan.
Aggressive plan
“And then in April after the Bank of Japan came up with this very aggressive plan to boost the money supply, we thought, we don’t know whether this policy will work, but we think the market’s giving a very low probability to its working. And so we wanted to make sure that if that policy works we were fully exposed to Japan. We’re not overexposed but 7 or 8% is about a neutral view for us, so that’s where we are.”
Heronbridge Investment Management is also a new name managing part of Witan’s UK equities portfolio, having been allocated £65m in June, while the trust also gave more funds to Lansdowne Partners, which was appointed at the end of 2012.
Bell Explained: “We appointed Lansdowne in December with about a £30million allocation, which was quite small for us and it reflected the fact that they’re well known as hedge fund managers but this is a completely non-hedged strategy, but it was quite newly established. So we allocated the available cash that we had to them with a view to watching carefully what they do, to seeing how they performed, finding out a little bit more about how they pick stocks and so forth. And they had an outstanding first half of the year.”
A second interim quarterly dividend of 3.3p per ordinary share will be paid on 18 September, making a total of 6.6p for the first half of 2013.
Big changes
In a research note released this morning, Numis Securities recognised the significant changes that have occurred to Witan since Bell was appointed in 2010:
“All of the managers now have an active mandate, with no exposure to index trackers. Gearing (11.7%) and asset allocation are actively managed, demonstrated by Andrew’s decision to increase the exposure to Japan.
“In addition, the expense ratio is very low for a multi-manager vehicle, which was 0.69% of average net assets in 2012 (0.97% including performance fees paid). The fund currently trades at an 8% discount, which is protected at 10% by buybacks. As a result, Witan remains one of our favoured global growth funds.”
