Alliance Trust recently published its interim results for the six months to 30 June. These results are the first the investment trust has posted since it shifted responsibility for investing its global equity portfolio from its own investment management arm to multiple investment managers under the overall guidance of consultant Willis Towers Watson (WTW). Under the new multi-manager approach, WTW has hired eight different managers, each with a remit to run a focussed portfolio of around 20 of their best ideas.
The company has said that this change of strategy will create a portfolio where the managers have the ‘highest conviction’ in their investments and that this will drive outperformance. This sounds promising but questions have to be asked as to whether it comes together as a high conviction portfolio, considering it will add up to around 160 stocks. The managers WTW have hired are also quite unknown and it may take more than the consultant judging them as ‘best-in-class’ to win over UK investors.
Paying eight managers instead of one also comes at a price and fees for the fund have risen from 0.45% to 0.6%. This comes during a time of increasing pressure on the costs of funds. However, the target for the fund is now 2% outperformance against the MSCI World benchmark compared to the previous target of just 1%, and if they manage that extra performance then the slight rise in costs will hardly matter.
Overall, results have been promising since the change of management. However, it will be some time before investors are able to judge whether the new approach is consistently adding value.
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