Alliance

[Dod101]

I am not suggesting that Alliance is about to do a Scottish Mortgage but it has had an excellent few months, beating its benchmark comfortably and as a consequence has become my biggest holding. I am therefore about to sell 20% of it and top up Law Debenture. Alliance seems to be on a bit of a roll and this will give a modest boost to my income.

Dod

[G3lc]

……….so why is it at a discount - could it be the lowish dividend ?

[richfool]

Alliance is one of my 2 global growth holdings. The other is Brunner (BUT). I am conscious Alliance has exposure to US tech which may have assisted its SP performance over recent months. Its yield is above 2.0% whereas Brunner's has dropped below 2.0% due to its SP growth over recent months.

Noted Law Debenture is in the UK growth & incone sector and thus has a higher yield.

I hold all three.

[richfool]

I note the telegraph is re-recommending Law Debenture:

https://www.telegraph.co.uk/money/inves ... dividends/

[Dod101]

……….so why is it at a discount - could it be the lowish dividend ?

I think, and it is reflected in the lack of enthusiasm for it here, that people still see its years of trouble and strife. It is now though an entirely different beast and it’s recent performance has beaten the index funds of its benchmark.

Dod

[scotia]

I am not suggesting that Alliance is about to do a Scottish Mortgage but it has had an excellent few months, beating its benchmark comfortably and as a consequence has become my biggest holding. I am therefore about to sell 20% of it and top up Law Debenture. Alliance seems to be on a bit of a roll and this will give a modest boost to my income.

Dod

I am certainly happy with Alliance, but don't see it as a significant outlier which needs cut back. I also have Fundsmith and world trackers (VEVE and VWRL) with similar 5 year performance. My one global IT which has fallen back a bit is F&C IT (FCIT), partially caused by an increased discount, but I'll give it a chance to recover.
Law Debenture is in a different category , since it is primarily a UK IT, and around 20% of its NAV consists of wholly owned subsidiaries providing Independent professional services. Over the past 5 years it has provided a return comparable with all-world funds, and consequently this is well above the UK markets. So why don't I hold it? I suppose I'm a bit (unjustifiably ?) wary of valuations of wholly owned companies. But the Law Debenture returns are certainly impressive

[yorkshirelad1]

Always useful to get a nudge to prompt me to look at quieter backwaters.
I've just looked at the 10 year chart, and it's not been shabby at all (compared to e.g. FTSE100, but I should probably pick a better comparator index). Maybe it was getting rid of Ms Garrett-Fox, or the new ish multi-manager approach (Willis Towers Watson) is paying off.

This week's IC has an article primarily about Witan, but which makes several mentions of Alliance
Should Witan change its multi-manager approach?
IC January 24, 2024
https://www.investorschronicle.co.uk/ideas/2024/01/24/should-witan-change-its-multi-manager-approach/
via Google: https://www.google.co.uk/search?q=investors+chronicle+witan

Alliance is also listed in the same issue of IC under "NEW 52-WEEK HIGHS"

[Jam2Day]

LWDB ticks my box on several counts over the last ten year performance. 114% dividend increase, 44% dividend cash distribution on total return of 95% and 49% of issued share capital bought back and held in treasury which suggests optimism on underlying value and good cash management. I like good cash management.

[Dod101]

Always useful to get a nudge to prompt me to look at quieter backwaters.
I've just looked at the 10 year chart, and it's not been shabby at all (compared to e.g. FTSE100, but I should probably pick a better comparator index). Maybe it was getting rid of Ms Garrett-Fox, or the new ish multi-manager approach (Willis Towers Watson) is paying off.

This week's IC has an article primarily about Witan, but which makes several mentions of Alliance
Should Witan change its multi-manager approach?
IC January 24, 2024
https://www.investorschronicle.co.uk/ideas/2024/01/24/should-witan-change-its-multi-manager-approach/
via Google: https://www.google.co.uk/search?q=investors+chronicle+witan

Alliance is also listed in the same issue of IC under "NEW 52-WEEK HIGHS"

Looks as if Willis Towers Watson’sapproach is paying off for Alliance. Over 1, 3 and 5 years Alliance has outpaced its MSCI benchmark. That cannot be bad. The reason I mentioned Law Debenture is because it is a relatively new holding for me and I always like to take some profits from a high flier so will sell some Alliance and put the proceeds into Law Debenture. That will increase my income a bit. Having sold half of my BAT, I need to boost it if I can.

Dod

[clissold345]

This week's IC has an article primarily about Witan, but which makes several mentions of Alliance
Should Witan change its multi-manager approach?
IC January 24, 2024
https://www.investorschronicle.co.uk/ideas/2024/01/24/should-witan-change-its-multi-manager-approach/
via Google: https://www.google.co.uk/search?q=investors+chronicle+witan

Thanks for giving a non-paywall link to the Witan article.

[AndrewInDevon]

The discount (at 5% v 10% for SMT) has nothing to do with the dividend yield, which is about right for global growth stocks with an income element.

Didn’t SMT have lots of PE with dubious valuations, coupled with a governance mini crisis? Alliance is in public equity.

I am in Alliance, it’s my best performing holding. My only qualm about it is its multi-manger approach, overseen by WTW…lots of professionals with their snouts in the fees bucket. But fair doo’s, so far so good. It’s too early to mess around with my portfolio (only 6 months old) so I will sit tight, but it’s got me thinking about why I am also in Fundsmith when Alliance has performed better, gives a dividend and has a lower OGC.

[Dod101]

Alliance results for 2023 show that it has well outshone its benchmark, the MSCI All Country Index which returned a mere TR of 15.3%. Alliance did 20.23%

Over that last five years, Alliance has returned 12.4% pa.
Quite a remarkable turnaround. I have held it for many years.

Dod

[richfool]

Alliance results for 2023 show that it has well outshone its benchmark, the MSCI All Country Index which returned a mere TR of 15.3%. Alliance did 20.23%

Over that last five years, Alliance has returned 12.4% pa.
Quite a remarkable turnaround. I have held it for many years.

Dod

Brunner and Alliance are currently amongst my star performers. Added over the last couple of years, at different times, and topped up along the way. To give a feel for it, my holding of Alliance is up 12% and Brunner up 22%. My overall best performer held over a much longer period is JGGI.

[richfool]

Willis Tower Watson, managers of Alliance trust have replaced Jupiter with ARGA:

Alliance Trust PLC - Portfolio Update: Stock Picker Change

Alliance Trust PLC (“the Company”)

LEI: 213800SZZD4E2IOZ9W55

Change to Alliance Trust’s stock picker line-up

The Company announces that its investment manager, Willis Tower Watson (“WTW”), has appointed a new stock picker for its multi-manager global equity portfolio. ARGA Investment Management (“ARGA”) replaces Jupiter Asset Management (“Jupiter”) following Ben Whitmore’s decision to leave Jupiter later this year and set up his own business.

Craig Baker, WTW’s Chief Investment Officer and Chair of Investment Committee, said: “While we continue to have high regard for Ben’s skill as an investor, this change of circumstances introduces potential risks which will take time to fully assess. We have therefore decided to replace Ben’s allocation with one run by another stock picker with a similar value-investing philosophy. This will ensure the portfolio remains balanced across investment styles, regions, and sectors, and continues to seek to generate market outperformance from stock selection.

ARGA is a global value manager, founded in 2010 by Chief Investment Officer A. Rama Krishna, who has over 30 years’ experience managing global and emerging markets equities. He previously worked at Pzena Investment Management from 2003 to 2010 where he led development of global value strategies while co-heading the emerging markets value team. Prior to that he worked for Citigroup Asset Management and AllianceBernstein. ARGA has £11.8 billion of assets under management as of 31 March 2024 and its staff are based in Stamford, USA, Chennai and Mumbai, India, and London. The firm’s investment philosophy is rooted in traditional value principles which seek to capitalise on investors overreacting to negative events and mistaking temporary stresses in share prices for permanent losses of capital.

ARGA has been allocated approximately 8% of the Alliance Trust portfolio to manage, funded from Jupiter’s allocation, with some minor adjustments to other stock picker allocations. The full list of stock picker allocations will be available in the April factsheet published in May.

Juniper Partners Limited
Company Secretary
18 April 2024

https://www.investegate.co.uk/announcem ... k-/8143506

Seems a logical decision.

Disc: I hold Alliance.

[richfool]

Alliance is rather topical at the moment. In addition to the above, I also came across this Trustnet comparison between Alliance and FCIT:

F&C vs Alliance Trust: Which core global equity trust should you pick?

18 April 2024

Experts explain the differences between the two trusts, share their preferences and suggest strategies to complement them.

By Jean-Baptiste Andrieux,

Reporter, Trustnet

F&C Investment Trust and Alliance Trust are among the largest investment trusts in the IT Global sector and have a long history dating back to the 19th century, making them popular choices as one-stop-shops for core exposure to global equities.

Investors might have a hard time choosing between the two, as they seem very similar at first glance. Both take a multi-manager approach, are well diversified and are aligned with global benchmarks from a country and sector perspective.

Historical performance may not help investors distinguish between the trusts, either. Alliance has had the upper hand over the past decade, but F&C has performed better over 20 years.

How do Alliance Trust and F&C differ from each other?

Although both funds use a multi-manager structure, there are nuances. F&C invests in funds run by 13 managers, resulting in a portfolio comprising approximately 400 stocks, whereas Alliance Trust uses segregated mandates to get access to its 10 managers’ top 20 holdings.

Aidan Moyle, investment analyst at Hargreaves Lansdown, said: “This gives Alliance a higher conviction approach in their managers’ best ideas and results in a portfolio of 200 stocks from 10 managers. The use of segregated mandates also gives them access to managers that aren’t available to UK retail clients.”

Nicholas Todd, investment trust research analyst at Kepler Partners, countered that using funds makes it easier for F&C’s manager Paul Niven to adjust the portfolio tactically, depending on his outlook.

As a result, F&C has a greater style bias at times, which may impact short-term performance based on whether Niven makes the right call or not.

For instance, the trust significantly underperformed its benchmark over the past 12 months. Niven positioned the portfolio towards value stocks at the beginning of 2023 and missed the ‘Magnificent Seven’ rally as a result, although he shifted to a more balanced exposure during the year.

Another difference is F&C’s exposure to unquoted investments, which has been a “valuable source of alpha” for four out of the last five financial years and offered “good diversification”, according to Todd.

Dan Coatsworth, investment analyst at AJ Bell, pointed out that private companies are less liquid, which may explain why F&C trades on a deeper discount of 10.2% versus 3.9% for Alliance Trust.

Both trusts are ‘dividend heroes’; Alliance Trust has raised its dividend for 57 consecutive years, while F&C has done so for 53 successive years. Yet, Alliance Trust has a bigger dividend yield at 2.05% versus 1.48% for F&C.

Coatsworth said: “Alliance Trust made a strategic decision in 2021 to boost its dividend payments and make the investment trust more attractive to a bigger pool of investors.

“This level of yield is still small versus what’s on offer from equity income-specific trusts but the combination of income and growth is why certain investors want to own the shares.”

Which trust do experts favour?

James Carthew, head of research at QuotedData, said Alliance Trust changed its strategy seven years ago, which was a turning point. The board appointed Willis Towers Watson to run the trust in 2017 and became more aggressive about tackling the discount. Around £1bn worth of shares have been bought back since then.

“Even though Alliance Trust’s new investment strategy is only seven years old, the trust’s returns have already made up the underperformance earlier in the decade. Its 10-year returns have now pulled ahead of F&C’s (12.6% per annum on average to F&C’s 12.0%),” Carthew said.

“It feels to me as though the gap will only get wider. If I had to choose between the two, Alliance Trust is the obvious favourite.”

Mick Gilligan, head of managed portfolio services at Killik & Co, prefers F&C due to its wider discount.

Meanwhile, Moyle believes F&C may be better positioned if central banks cut interest rates due to its 10% allocation to unlisted equities.

“If rates were to start falling, there could be a change in sentiment and investors could start moving more risk-on and increasing exposure to private companies,” he said.

https://www.trustnet.com/news/13411537/ ... d-you-pick