The Witan Investment Trust has dumped Crux Asset Management and SW Mitchell from its multi-manager line-up as it removes all European funds from its portfolio, instead gaining access to the region via global funds.
The investment trust had had a 2% weighting in each of the managers, who ran segregated mandates for Witan, according to the April factsheet. That was already down from the 4.3% in each at the end of 2019, according to Witan’s 2019 annual report.
At the time, the mandates had represented approximately £100m each to Crux and SW Mitchell.
A regulatory filing this week said the positions were “substantially reduced” in February and were subsequently sold.
“The proceeds have principally been allocated between Witan’s global managers, who are able to invest in European equities when appropriate but are not limited to one region,” the filing said. It included Latitude Investment Management and the GMO Climate Change Fund “both of which are in the smaller mandate category of managers viewed as having strong potential to add value in the medium term”.
The May factsheet would include the fund manager and geographical weightings, the filing said.
Witan exposure to Europe will now inevitably focus on large-cap global leaders
Willis Owen head of personal investing Adrian Lowcock said it was “quite a big decision” for Witan not to have direct exposure to Europe at an asset allocation level. “The region accounts for over 400 million people and is a major economic region.”
As well as the move likely resulting in less exposure overall, Lowcock said it would also result in “less depth” to the European region with more concentration in global leaders and large companies. “Part of the appeal of such investment trusts is their asset allocation and fund selection decisions – removing European exposure means they are also outsourcing the asset allocation decision.”
In the period since the coronavirus sell-off began, on 20 February, the Witan investment trust has fallen 22.3% compared to 18.2% falls in the FTSE All Share and 7.4% falls in the FTSE World.
Over the same period, Crux European Special Situations, a less concentrated version of the portfolio Richard Pease (pictured) ran for Witan, has fallen 11.8%. SW Mitchell European, managed by Stuart Mitchell, fell 13% over the period.
Lowcock rated Pease’s “excellent” track record and said he had a defensive style. He was less familiar with Stuart Mitchell.
Witan points to new benchmark as it highlights fund manager changes
Witan also announced it had divested from its investment with Pzena Investment Management, a deep value fund house. The proceeds have been allocated to a US equities ETF until Witan picks a new global equities manager to run the allocation. Pzena’s global equity funds have fallen approximately 19% since the coronavirus sell-off took hold.
Witan pointed investors to the fact it had “simplified” its global benchmark in January so that it now consisted of 15% on a UK index and the remainder on a world index. It total this leads to an allocation of 19% in the UK due to the country’s weighting in the global index.
Previously, Witan’s benchmark was 30% UK and 70% in a composite of four regional indices.
As part of the changes, it switched Lindsell Train’s £180m UK equity mandate to a global mandate. Its remaining UK equity assets are managed by Artemis fund manager Derek Stuart and Heronbridge Investment Management fund manager Bevis Comer.
Besides the UK, the investment trust also holds Asia-Pacific and emerging markets fund managers.