Witan Investment Trust (WTAN) offers investors broad exposure to global equities via a multi-manager strategy. The trust’s investment director, James Hart, believes that the global economy, led by the US, is still growing at a healthy but moderate pace, even though there are regions that are growing more slowly, and equity valuations are reasonable. He says this provides opportunities for long-term investors. While recent performance has been affected by higher stock market volatility, WTAN’s longer-term record of outperformance versus its composite benchmark remains intact. Given the trust’s robust level of income so far in FY18, the board is confident of another year of dividend growth, which would represent the 44th consecutive annual increase.
The majority of WTAN’s assets are run by specialist external managers, who are selected for their high-conviction, unconstrained approaches to stock selection. There are currently 10 managers employed: three investing in the UK, three globally, two in continental Europe, one in Asia Pacific, and one in emerging markets. Up to 12.5% of WTAN’s portfolio may be invested directly in specialist funds and niche/newly established managers. Gearing is undertaken at the corporate level up to a maximum 20% of NAV; at end-October 2018, WTAN’s net gearing was 11%.
Share price volatility has increased in 2018, following a particularly benign period in 2017. As an example, the key US stock market has experienced two corrections so far this year – investor concerns include rising interest rates and escalating trade tensions. However, corporate earnings growth remains robust, meaning lower valuations may provide an opportunity for patient, long-term equity investors.
WTAN’s discount has ranged from 0.3% to 2.8% over the past 12 months, in line with the board’s objective for the trust’s shares to trade at a sustainable low discount (or premium) to NAV. Its current 1.7% share price discount to cum-income NAV compares with the 1.6%, 3.3%, 2.7% and 7.0% average discounts over the past one, three, five and 10 years, respectively. The board aims to grow the dividend at a rate higher than UK inflation; the annual distribution has increased for 43 consecutive years (WTAN’s current yield is 2.2%).