Results analysis from Kepler Trust Intelligence
Alliance Trust (ATST)
Results analysis from Kepler Trust Intelligence
· Today ATST released their annual results for the year ending 31 December 2021. Over the 12-month period, the trust delivered NAV total returns of 8.5%, while in share price terms the trust returned 9.4%. This compares to the benchmark MSCI ACWI Index return of 12.7%.
· Despite the pandemic severely impacting the dividends of many companies, ATST has continued its exceptional track record of dividend growth. Over the year the trust paid out dividends of 14.38p per share, representing an increase of 3% and the 54th consecutive year of dividend increases.
· Looking forward, the board remain confident in the investment strategy. The high-conviction approach of the underlying managers together with the low correlation of their styles, should mean the trust is well positioned to take advantage of future alpha generating opportunities, in particular when market leadership broadens out from the small number of technology stocks that led 2020.
Like many other globally diversified strategies, ATST has faced a significant headwind in 2020. The pandemic has exacerbated volatility and large disparities in returns between country and sector, with US mega cap tech stocks delivering the bulk of the gains.
Against this difficult backdrop, the trust has still managed to deliver solid positive NAV returns of 8.5% and 9.4% in share price terms. We see this a respectable result from the trust and, while it has underperformed its benchmark for reasons already illustrated, it now stands to significantly benefit from a broad global recovery.
However, given the amount of uncertainty still ahead, this may not be the time to take concentrated bets on particular countries, sectors or investment styles. In that context, ATST's strategy of working with a globally diverse range of stockpickers, each one fielding a focussed 'best ideas' portfolio, may be more appropriate.
Alongside capital appreciation, 2020 saw another exceptional year of dividend growth for the trust. It was the 54th year of consecutive dividend increases, the third most of any trust in the investment universe. Dividends were supported by revenue reserves, which provide a cushion to protect the trust's ability to continue to pay its dividend even if the underlying income from the portfolio is impaired - a feature unique to the investment trust structure.
Currently ATST is trading on a discount of 6.2% in comparison to a peer group weighted average of 3.4%. Against this backdrop, particularly for investors who look for an international equity exposure, ATST has solid appeal.
Visit http://www.trustintelligence.co.uk/investor for more high quality independent investment trust research.
This report has been issued by Kepler Partners LLP. The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.
Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.
Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.
The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.
The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.
This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.
Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm's internal rules. A copy of the firm's Conflict of Interest policy is available on request.
Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 9/10 Savile Row, London W1S 3PF with registered number OC334771.
Reach is a non-regulatory news service. By using this service an issuer is confirming that the information contained within this announcement is of a non-regulatory nature. Reach announcements are identified with an orange label and the word “Reach” in the source column of the News Explorer pages of London Stock Exchange’s website so that they are distinguished from the RNS UK regulatory service. Other vendors subscribing for Reach press releases may use a different method to distinguish Reach announcements from UK regulatory news.