Witan Pacific Investment Trust (WPC) employs an active multi-manager strategy, aiming to generate long-term growth in capital and income from a diversified portfolio of Asia Pacific equities, which includes Japan, Australia and India. Since adopting the multi-manager approach in 2005, WPC has outperformed its benchmark, the MSCI AC Asia Pacific Free index, in eight out of 12 financial years, but has lagged since mid-2016. The board changed the manager line-up from end-September 2017, dropping Gavekal and appointing Dalton Investments and Robeco Institutional Investment Management. WPC has a progressive dividend policy, aiming to grow the annual distribution in real terms. The regular dividend has increased in each of the last 12 years.
WPC’s board actively manages the line-up and allocations of its external managers, aiming to outperform the benchmark and diversify risk. At end-September 2017, the allocations to the revised line-up of four external managers were set as: Aberdeen (25%), Dalton (10%), Matthews (40%) and Robeco (25%). The managers have complementary investment styles, while the multi-manager approach tends to smooth WPC’s investment performance compared to that of the individual managers. The board is excited about the appointment of the two new managers and believes that they will be accretive to WPC’s relative investment performance.
Global equity markets have delivered strong returns over the last 12 months and during this period Asian shares in aggregate have outperformed global equities. Asian corporate earnings growth has been robust and estimate revisions positive. This includes Japan, which has been out of favour with global investors for a number of years. However, on a forward P/E multiple basis Asian equities continue to look relatively attractive; the current 10.8% discount to world equities is wider than the 10.0% average of the last five years.
WPC’s board actively seeks to manage the discount, repurchasing shares when they trade at a substantial and anomalous discount to NAV. The current 13.3% share price discount to cum-income NAV compares with the range over the last 12 months of 10.7% to 16.6%. It is broadly in line with the averages of the last one, three and five years of 13.5%, 13.3% and 13.2% respectively. WPC has a progressive dividend policy; the regular annual dividend has increased for 12 consecutive years. The current yield is 1.4%.