Analyst research note – Kepler Trust Intelligence December 2021

UPDATE: 17 DEC 2021

Alliance Trust (ATST) follows a multi-manager approach to global equity investing, with the board having delegated the management of ATST to Willis Towers Watson (WTW), the global consultancy firm. The Alliance Trust Investment Committee team of Craig Baker, Stuart Gray and Mark Davis at WTW select a suite of managers from a long list identified by their manager research team.

As discussed under Portfolio, ATST’s underlying managers have very distinct styles. Each manager is asked to run a concentrated portfolio of their highest conviction ideas, with the WTW team then weighting the managers in a way that ensures ATST’s factor risks do not deviate from those of its benchmark, the MSCI ACWI. The central idea behind this strategy is that over the long-run fundamentals should drive performance, even if they can be drowned out by noise in the short-term.

For much of the pandemic period, this balanced approach has been struggling against a market seeing strong stylistic outperformance. ATST’s underlying equity managers’ performance (a metric which removes the effect of underperforming legacy assets) was ahead of the benchmark until November, which saw a sharp correction in markets due to the emergence of the omnicron variant (which will hopefully be shortlived) as we discuss in the Performance