Alliance Trust (ATST)

29/07/2022

Results analysis from Kepler Trust Intelligence

Alliance Trust (ATST) has reported its half year results for the period ending 30 June 2022. Over this six-month period ATST has generated a NAV total return of -10.5%, ahead of both the -11% return of its benchmark, the MSCI ACWI, and the -13.5% median NAV total return of its peers. ATST generated an -11.3% share price return over the same period.

Over the six-month period ATST traded on an average discount of 6.3%, above the 5.9% average for the 2021 financial year.

One of the major developments during the current financial year has been the pay-out of a higher dividend. The board have paid two quarterly dividends totalling 12p for 2022 so far, a 62% increase on the first two dividends paid in 2021.

The other major change to ATST has been the loss of one of its delegated stock picking managers, the team at River and Mercantile.

Kepler View

Alliance Trust's (ATST) recent six-month performance is, in our view, a reminder of the benefits of a diversified approach to investing. While ATST's highly diversified approach had once caused it to lag its benchmark, due to the dominance of a concentrated handful of mega cap stocks, it is by the same merit that ATST has also outperformed over 2022 as the mega cap stocks, primarily the high growth names, have felt the brunt of the selloff.

We believe that ATST offers a core, 'one stop shop' option for an investor's global equity portfolio. Thanks to WTW's strategy there is less chance of investors being caught on the wrong side of a market downturn, as the team ensures that ATST has no style biases which are one major source of potential underperformance.

While offering a diversified, on benchmark stylistic exposure, ATST offers a highly active approach to stock selection. WTW highlights GQG partners, as being one of the noteworthy examples of success over the last six months, having been one of its major return contributors.

Though the selloff in equity markets has been largely indiscriminate, WTW are happy with the fundamental performance of their underlying holdings. In their view, once the broad-based selloff alleviates, fundamentals will become the primary driver of stock returns. They note that if we enter an era of structurally higher inflation, it may mark the end of the growth-style trend which had previously acted as a headwind against ATST's performance.

We believe that the higher dividend is a clear benefit to shareholders, making the trust a more attractive investment vehicle, which could increase the demand for its shares. This, in combination with ATST's ongoing resilience in tough markets, may make its current discount of 6.4% an attractive entry point (as of 27/07/2022).

CLICK HERE TO READ THE FULL REPORT

Visit Kepler Trust Intelligence for more high quality independent investment trust research.

Important information

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.  

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm's internal rules. A copy of the firm's Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 70 Conduit Street, London W1S 2GF with registered number OC334771.