Alliance Trust divi rises as it outperforms benchmark

Alliance Trust, the £2.7 billion fund, edged ahead of its benchmark in the first half of the year as it saw the benefits of a change in strategy amid a strong rebound in global equity markets.

Lord Smith said Alliance Trust has outperformed many of its peers in a 'challenging period' for active managers. Picture: contributed.

The Dundee-based trust – which also reaffirmed its commitment to remaining headquartered in the city – delivered a total shareholder return of 16.8 per cent against the 16.7 per cent gains of its benchmark index.

Alliance recently completed the sale of its Alliance Trust Savings (ATS) arm to Interactive Investor, the final move in a simplification of its interests announced two years ago following a strategic review that also saw it sell its investment-management arm to Liontrust.

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Chairman Lord Smith of Kelvin said that since the trust appointed Willis Towers Watson to oversee its investments as part of the changes, total returns have been 22.2 per cent compared to the 21.5 per cent seen in its benchmark index.

“We have also outperformed many of our peers in a challenging period for active managers,” he pointed out.

The trust has announced an interim dividend of 3.49p, a 3 per cent year-on-year increase that Smith said continued its long record of rising payouts that now stretches back over 50 years.

“We started 2019 expecting there to be increasingly difficult global economic conditions and continued political uncertainty, and this has proved to be the case,” said Smith.

“The first half brought significant volatility in the equity market which may well continue. We believe that our diversified, best ideas investment approach means that the trust is well-positioned to take advantage of volatile markets, as all our stock pickers have extensive experience of a wide variety of market environments over many years, including both bull and bear markets.

“We are confident in their abilities to identify the winners and we believe they will deliver attractive investment performance over the long term.”

The trust said the success of its stock selections in Asia-Pacific and emerging markets and in the financials sector have been the most significant positive contributors to performance since the start of the year.

Amongst the best performers in the trust’s holdings were Indian banking and financial services company HDFC Bank and Chinese private education provider New Oriental Education.

Following the sale of ATS and the trust’s office premises, Allied Trust stressed it is remaining headquartered in Dundee. “We have taken a lease of a smaller office there in which the executive function will be based and where we will hold board meetings,” said Smith.