Five-year performance showed a NAV total return of 104% against the composite benchmark’s 82%, which Witan said was encouraging against the “market gloom” that followed Lehman Brothers’ collapse in 2008.
The trust’s annual results to 31 December informed that its net assets had grown by almost a quarter, from £1.11bn to £1.37bn and its discount had narrowed from 10.2% to 6.1%, which it said reflected, in part, increased investor enthusiasm for its active multi-manager approach to accessing global equity markets.
While shares are currently trading at a discount, Witan’s board said it was seeking powers at the forthcoming AGM on 30 April to buy shares into Treasury, for possible reissuance in the event of the shares moving to a premium. Shares will only be resold from Treasury at, or at a premium to, NAV per ordinary share.
Share price performance was 36.7%, boosted by the narrower discount, and the total dividend for the year was 14.4p, up 9.1% on the previous year’s 13.2p.
Reduced gearing
Chairman Harry Henderson and chief executive Andrew Bell (pictured) put a statement out that explained their strategy during the year, which was to remain fully invested against a seemingly improving economic growth and corporate earnings, although the company had reduced its gearing towards the year end.
It was increased to 11% during the middle of the year before being reduced in the autumn, ending the year at 7.3%, and was said to “significantly benefit” performance through increasing the group’s exposure to rising markets.
2013 saw Witan complete its manager review, bringing in value managers Pzena and Tweedy, Browne towards the end of the year (replacing Southeastern and Thomas White International) but said it should have had more European exposure and less in emerging economies, but overall felt the year to be successful for shareholders.
Lansdowne: star performer
The trust had added to its Japanese exposure and took profits on UK smaller companies, run by Henderson. It also thanked Artemis and Lindsell Train for their “particularly strong absolute and relative returns of over 35%”.
Elsewhere, MFS in global equities, Marathon in Europe and the portfolio of direct holdings contributed close to 30%. Witan said its standout performer however was Lansdowne, which achieved a total return of 49% in its first year with Witan. It now makes up a larger proportion of the overall portfolio, having had its stake increased from 2.5% to 8.8%.
"Although current inflation expectations are low, this follows several years of subdued growth. Government bond yields have risen from the unprecedentedly low levels of a year ago but remain well below levels viewed as normal prior to the financial crisis.
"However, it is possible that a year of surprisingly strong growth will rekindle fears that the exceptional money creation in recent years will lead to rising inflation. Bonds remain vulnerable both to a cyclical rise in inflation and changed expectations about where inflationary risks lie for the future," Henderson and Bell added.
An analyst from Numis said of Witan's strong performance: "This highlights the significant changes since Andrew Bell was appointed CEO in February 2010, with all of the managers now having active mandates, and there being no exposure to index trackers. Gearing and asset allocation are actively managed, demonstrated by decisions during the year to increase the exposure to Japan and value managers in the UK.
"In addition, the expense ratio is very low for a multi-manager vehicle, at 0.69% of average net assets in 2013. The fund currently trades at a 7.2% discount, which is protected at 10% by buybacks. As a result, Witan remains one of our favoured Global Growth funds."
