The two mandates, representing approximately 13% of the Witan Investment Trust portfolio, will be picked up by Pzena Investment Management and Tweedy, Browne Company. They will replace the portfolios that have been run by Thomas White International and Southeastern Asset Management for the last six and nine years, respectively.
New York-based Pzena will take on roughly £145m to run the assets in line with its global expanded value strategy, which seeks high, long-term alpha from a global portfolio of 60-90 companies. Its deep value approach uses fundamental research to select companies sitting in the best fifth of the market in value terms and selling when they rise above market average valuation.
Tweedy, Browne will account for approximately £45m and run in accordance with its high dividend strategy.
The firm, based in Stamford, Connecticut, chooses a bottom-up approach to value investing and boasts early brokerage relationships with the late Benjamin Graham and Warren Buffett. Its global high dividend holds approximately 40 stocks with an emphasis on secure and growing dividend yields.
Witan chief executive Andrew Bell said he was mindful of the cost of changing managers but felt the two new ones had more scope to add value for shareholders in the future through selective stock picking.
Bell said: “These two appointments signal a continuation of our move towards investing more with specialist managers who have fundamentally based and high-conviction approaches towards adding value through stock picking and portfolio construction.
“We would also like to thank Southeastern and Thomas White for their stewardship of the company’s assets over the past nine and six years respectively.”
A note from Numis Securities noted the more active approach to management Bell had taken since he was appointed CEO in February 2010.
It said: “All of the managers now have an active mandate, with no exposure to index trackers. The changes should have little impact on asset allocation, given that both existing and new managers follow a global approach, although it will increase exposure to managers with a value approach, previously a relatively small exposure. In addition, gearing, which is at 9%, and asset allocation are actively managed.”
Numis said the fund was currently trading at a 7.7% discount, protected at 10% by buybacks. The broker added the TER was very low for a multi-manager vehicle, which was 0.69% of average net assets in 2012, or 0.97% including performance fees paid.
In a corporate video to promote the change, Bell likened the markets to the antelopes of the Serengeti for their ability to anticipate change early.
He said: “I think the outlook for next year is better than this year economically, but it probably won’t be as much of a bumper year for the markets because the markets are always, a bit like the antelope on the Serengeti, they can sniff rain a long time before it actually arrives. I think the markets this year are anticipating an improvement in earnings and economic growth. Which I think they will get, but having gone up by 20-odd per cent in many cases this year be much harder to repeat that even if the good news comes through.”
