Witan beats benchmark with NAV increase

The £1.5 billion Witan Investment Trust reported an increase in net asset value (NAV) of 29.4% over the year to 31 December, 8.7% ahead of its benchmark.

Andrew Bell, chief executive of the multi-manager trust, attributed the performance to strong performance by the underlying managers as well as judicious use of gearing. Only one of the underlying managers underperformed its benchmark during the year - emerging markets manager Trilogy. Otherwise, groups such as Lansdowne, Lindsell Train and Artemis performed particularly strongly.

The trust had no strong asset allocation bets during the year, but a marginal overweight position in the US was positive for performance, while being underweight Europe and overweight emerging markets were negative. The trust's private equity holdings were also positive for performance.

The trust announced a final dividend of 14.4p, an increase of 9.1% - marking the 39th consecutive year of rising payouts.

During the year, the trust increased its exposure to Japan, by appointing a Matthews Asia for Far Eastern equities including Japan, by buying a Japanese fund managed by Polar Capital and by investing in Japanese equity index futures. It also appointed two new global managers Pzena and Tweedy, Browne during the year, both of which take a value approach.

Bell also took profits in areas where he felt that valuations had become less attractive, including UK Smaller Companies and private equity, reallocating to existing managers Lansdowne, Matthews and Heronbridge.

The trust has seen a strong run of performance under Bell's stewardship. It is now up 41.6% over three years, compared to an average return from its global sector peer group of 27.4%.

Analyst view

Broker Numis commented: "It has been a strong year for NAV performance from Witan's portfolio, driven by outperformance from most managers. This highlights the significant changes since Andrew Bell was appointed chief executive in February 2010, with all of the managers now having active mandates, and there being no exposure to index trackers.

"Gearing (7.3%) and asset allocation are actively managed, demonstrated by decisions during the year to increase the exposure to Japan and value managers in the UK. In addition, the expense ratio is very low for a multi-manager vehicle, at 0.69% of average net assets in 2013 (1.12%% including performance fees paid). The fund currently trades at a 7.2% discount, which is protected at 10% by buybacks. As a result, Witan remains one of our favoured Global Growth funds."