TIDMATST
Alliance Trust PLC
29 July 2022
Alliance Trust (ATST)
29/07/2022
Results analysis from Kepler Trust Intelligence
Alliance Trust (ATST) has reported its half year results for the
period ending 30 June 2022. Over this six-month period ATST has
generated a NAV total return of -10.5%, ahead of both the -11%
return of its benchmark, the MSCI ACWI, and the -13.5% median NAV
total return of its peers. ATST generated an -11.3% share price
return over the same period.
Over the six-month period ATST traded on an average discount of
6.3%, above the 5.9% average for the 2021 financial year.
One of the major developments during the current financial year
has been the pay-out of a higher dividend. The board have paid two
quarterly dividends totalling 12p for 2022 so far, a 62% increase
on the first two dividends paid in 2021.
The other major change to ATST has been the loss of one of its
delegated stock picking managers, the team at River and
Mercantile.
Kepler View
Alliance Trust's (ATST) recent six-month performance is, in our
view, a reminder of the benefits of a diversified approach to
investing. While ATST's highly diversified approach had once caused
it to lag its benchmark, due to the dominance of a concentrated
handful of mega cap stocks, it is by the same merit that ATST has
also outperformed over 2022 as the mega cap stocks, primarily the
high growth names, have felt the brunt of the selloff.
We believe that ATST offers a core, 'one stop shop' option for
an investor's global equity portfolio. Thanks to WTW's strategy
there is less chance of investors being caught on the wrong side of
a market downturn, as the team ensures that ATST has no style
biases which are one major source of potential
underperformance.
While offering a diversified, on benchmark stylistic exposure,
ATST offers a highly active approach to stock selection. WTW
highlights GQG partners, as being one of the noteworthy examples of
success over the last six months, having been one of its major
return contributors.
Though the selloff in equity markets has been largely
indiscriminate, WTW are happy with the fundamental performance of
their underlying holdings. In their view, once the broad-based
selloff alleviates, fundamentals will become the primary driver of
stock returns. They note that if we enter an era of structurally
higher inflation, it may mark the end of the growth-style trend
which had previously acted as a headwind against ATST's
performance.
We believe that the higher dividend is a clear benefit to
shareholders, making the trust a more attractive investment
vehicle, which could increase the demand for its shares. This, in
combination with ATST's ongoing resilience in tough markets, may
make its current discount of 6.4% an attractive entry point (as of
27/07/2022).
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