Global investment trust Alliance is on a roll, much to the delight of shareholders. In terms of dividends and capital returns, it is delivering the goods.
This month, it will pay shareholders its first quarterly dividend of the new financial year. At 6.62 p a share, it’s not mind-blowing, but it’s above what was paid 12 months ago (6.18 p).
And investors can be confident the trust’s record of annual dividend growth will be extended to 58 years come next March when the final dividend of the year is paid. The shares now trade just below £12.
This is because along with rivals City of London, Bankers and Caledonia, Alliance has the longest record among the investment trust sector for consecutive years of dividend increases.
It’s one that has had ‘dividend hero’ status conferred on it by the Association of Investment Companies – which the trust doesn’t want to lose.
As for share-price gains, Alliance is also doing little wrong. These have been 13 and 18 per cent over the past six months and year, respectively.
‘Yes, the trust is going through a good period,’ says Craig Baker, one of three individuals at Willis Towers Watson (WTW) who pulls the fund’s investment strings. ‘Our selection has been good.’
The fund, capitalised at £3.4 billion, is different to most other global funds in how assets are managed. Rather than employing one investment group, the trust’s board uses WTW to divide the fund’s assets between what it considers best-in-class managers.
The result is ten fund managers, picked from across the globe, that run 11 slices of the trust’s assets.
With the exception of a basket of 40-odd emerging markets shares overseen by Florida-based GQG, each slice comprises no more than 20 shares. Among the key fund groups it employs are Black Creek, GQG (manager of two portfolios), Lyrical, SGA and Veritas.
The picks of these top-drawer fund managers produce a combined portfolio of 215 global stocks. Top holdings include some of the big US techs (the likes of Alphabet, Microsoft, Amazon and Nvidia) although Baker insists there is more to the trust than these in-favour stocks.
The managers, he says, are always on the lookout for future winners, such as Japanese machinery parts maker Misumi and Brazilian energy firm Electrobas.
WTW’s role goes beyond selecting the best managers. It constantly monitors the performance of the chosen managers and shifts money between them so no one controls too big a slice.
On occasion, it will also wave investment companies goodbye if they think they no longer suit – and bring in fresh eyes.
The latest change was earlier this year when it replaced Jupiter with ARGA – a result of the Jupiter manager who WTW used on the trust (Ben Whitmore) deciding to set up his own investment business.
‘Whitmore remains a good manager and we may well go back to him in time when his boutique investment house is up and running,’ says Baker.
‘But we know ARGA Investment Management and its founder very well and we are excited to have their expertise on board.’
The trust has its own website (alliancetrust.co.uk) and has taken to the airwaves to promote its suitability as a long-term investment – tagline: ‘Find your comfort zone’.
It is a sign, some say, of the confidence that the trust’s board has in WTW.
Alliance’s ongoing charge is low at 0.62 per cent. The stock market identification code is B11V7W9 and the ticker is ATST.
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