Investment Company of the Year Awards Winners Interview - Alliance Trust

clock • 3 min read
Investment Company of the Year Awards Winners Interview - Alliance Trust

Alliance Trust were winner's at this year's Investment Company of the Year Awards.

Here, Investment Week hears from Alliance Trust on their recent win.

Alliance Trust took home the Global award. Read more about the trust here:

Can you give a brief overview of the team running the trust and the resources available? 

The team responsible for the construction and ongoing management of the trust is the Investment Committee comprising Craig Baker (chair), Stuart Gray (co-portfolio manager) and Mark Davis (co-portfolio manager). They are supported by wider resources that include WTW's manager research team.

What is key to your investment process on the trust and how do you utilise the investment trust structure?

As a multi-manager strategy, the key to its success is finding genuinely skilled managers that think differently and can generate alpha in excess of their fees. To maximise the impact of their skill, we use "high active share" or concentrated portfolios to increase expected returns. We blend the managers to achieve a robust and resilient portfolio that is diversified by style, geography, sector, and market cap. The investment trust structure enables our managers to focus on generating long-term returns, as opposed to having to deal with short-term inflows and outflows of capital.

How has the team negotiated difficult market conditions in 2023 and what is the longer-term impact for the strategy?

Sticking to our guns and focusing on stock selection, as opposed to trying to second-guess style, country, or sector factors, worked well for us in 2023. Our stock pickers found successful investments across a wide variety of sectors but especially in consumer discretionary, industrial and energy stocks. Our approach has delivered consistent returns through a range of market environments. As we approach year end, it's gratifying to see we are among the top-performing global trusts over 1, 3, 5 and 10 years.

Can you highlight a couple of interesting investment opportunities for the trust going forwards? How are you gaining exposure? 

Given the focus on stock picking, as opposed to investment themes, our managers are finding underappreciated opportunities in a wide variety of sectors. One recent purchase by Ben Whitmore at Jupiter is Nokia, the Finnish telecom equipment manufacturer. Although Nokia has suffered from temporary weakness in spending by US carriers, Ben believes this is a short-term headwind and that when demand for its products normalises the company will benefit from its dominant market position, alongside Ericsson. Sands Capital, one of our growth managers, sees an attractive opportunity in US-based Roper Technologies, a diversified industrial technology company that operates in over 40 businesses in more than 40 niche markets. Sands says the company is indiscriminate in the types of businesses it seeks to acquire; rather, it focuses exclusively on free cash generation and management quality. Each business is decentralised and operates autonomously, with a mandate to grow and generate cash. "Our research suggests that Roper is an acquirer of choice for engaged management teams that desire to continue independent operations. Over our investment horizon, we expect steady cash-flow growth as Roper executes on its disciplined acquisition and growth strategy," says Sands.

 

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