Celebrating its centenary this year, Witan Pacific looks to build on its enduring success, now as a multi-manager, predominantly seeking capital growth and offering relatively low-risk access to Asian markets
Proposition and Objective
Witan Pacific exists to provide investors with a balanced portfolio of stocks in the Asia Pacific region including Japan. This portfolio is designed to give returns ahead of market performance. It particularly appeals to advisors and their clients who do not wish to make their own asset allocation within the region but who understand the need to have representation in the Asia Pacific within a diverse portfolio of investments. It is a volatile world in the Far East and while there are many Japanese and Pacific ex-Japan funds, few pooled investments have the scope to cover the whole marketplace. In doing so, Witan Pacific in particular, gives investors access to one of the world's biggest economies in Japan plus two of its quickest growing ones in China and India.
Investment Managers
Witan Pacific was actually founded in 1907 and is 100 years old this year. For a lot of its modern life it was known as F&C Pacific until the mandate moved to Witan Investment Services in May 2005. At that time it also became multi-managed in that Aberdeen Asset Management and Nomura Asset Management now manage the fund sharing the same Pan-Pacific mandate and splitting the assets 50:50. These two managers have very different styles, which is a strength, as it plans to reduce volatility in the Trust's performance. For example, Aberdeen are well known for their stock picking ability and are generally very underweight in Japan as compared with the index, both these positions can at times lead to considerable swings in performance. By contrast, Nomura are more conservative in their approach. They pay more attention to regional weightings and overlay them with a stock selection bias. They have a particularly strong investment team in Japan where they maintain a higher exposure than Aberdeen.
Performance
Since the move to multi-manager in May 2005, Witan Pacific has performed solidly in line with its official benchmark (MSCI Asia Pacific) returning around 22% (to 31/05/07 source: WM Performance Services). In terms of the managers over the same period Aberdeen has outperformed while Nomura is pretty well in line with the index.
Structure
Witan Investment Services has been appointed as Executive Manager to manage and control the outsourced structure surrounding Witan Pacific and the relationships therein. WIS also assists the Witan Pacific Board of Directors on investment strategy and marketing activities. In essence, the Board sets the Company's strategy and the Executive Manager monitors and implements this strategy. For example, Witan Investment Services conducts the Trust's share buyback programme which looks to keep the discount in line with its peers. Share buybacks added 1.6% to the NAV during the financial year to 31/1/07 (source: BNP Paribas). In addition, WIS provides savings schemes and tax efficient products paying both initial and trail commission to IFAs through its savings platform www.wealthbuilder.com
Dividend, Gearing and Expenses
Yields have been growing in the Pan Pacific region over the past few years. Although, Witan Pacific predominantly seeks returns through capital growth, it has a policy to pay out as much of its income as is prudent. This led to a 12.8% increase its dividend in 2006/7. On the sometimes vexatious subject of gearing, Witan Pacific has no long term borrowings but allows its two managers the discretion to hold up to 10% of the portfolio in cash or borrow up to 10% when they see attractive opportunities for investment. Importantly, in a multi-manager world which often charges IFAs and their clients in excess of 2%, Witan Pacific brings together its proposition for just 0.9% (TER 2006/7). This means that open-ended funds have to outperform Witan Pacific by 1.1% before they can even match the Trust's returns.
Risk and Reward
Witan Pacific may never massively outperform or indeed massively underperform Pan-Pacific markets. It is not designed to offer those kind of volatile returns. However it does offer IFAs and clients a relatively low risk (to the Index) method of accessing Asian markets. In addition it does this at a very competitive price and brings together two high class investment managers in Aberdeen and Nomura in order to deliver solid above average returns to its shareholders.
