Witan Investment Trust [LON:WTN] is a GBP1.7bn multi-manager global investment trust established in 1909, as the family office of Alexander Henderson, 1st Baron Faringdon who made his fortune as a stockbroker and railways financier. Henderson’s family founded Henderson Global Investors to manage his estate after his death.
Given the fund’s global mandate, Witan benchmarks itself 85% against the MSCI All Country World Index and 15% against the MSCI UK IMI Index, and aims to achieve a Total Return exceeding the benchmark over the long-term and dividends exceeding inflation.
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The investment trust is a fund-of-funds, in other words Witan invests its clients’ pooled money in a portfolio of other funds who are specialist. The investor gets access through the fund-of-fund to specialist investment managers, such as hedge funds, that are usually only available to sophisticated institutional investors.
The fund-of-fund (or manager-of-managers) aims to achieve broad diversification and appropriate asset allocation with investments in a variety of fund categories that are all wrapped up into one portfolio.
Witan Investment Trust split into two primary components
The Witan fund is split into two primary components: core and specialist, split on a 75:25 ratio. The core portfolio offers investors access to a select and diversified group of managers investing in high-quality, predominantly large, and mid-sized companies. The specialist portfolio recognises that there are many attractive investment opportunities which fall outside the remit of most mainstream fund managers due to their size, domicile, or their unlisted or specialist nature and seeks opportunity through direct investment.
The core portfolio is split between a UK portfolio and Global portfolio. The fund can invest between 60% and 70% of the total portfolio in investment managers with a global mandate, aiming at around 65% of the total portfolio. The UK portfolio can occupy between 5% and 15% of the total portfolio, with a median allocation of 10% to UK fund managers.
The managers within the core portfolio can follow a range of strategies, but primarily pick high quality global companies with enduring cash flows, underappreciated growth prospects and are undervalued, often cyclical businesses. Managers are often mandated to manage an allocated amount of money for Witan
The 25% non-core portfolio
The special sauce in Witan’s recipe is the 25% non-core portfolio. This allows Witan to directly invest in top-performing funds or managers that have specialist regional or sector capabilities, and has a thematic seam running through the portfolio that includes fund with expertise in Emerging Markets, Climate Change, Private Equity and Life Sciences.
The fund is spearheaded by Andrew Bell, Witan’s CEO, and James Hart, the company’s investment director. Bell has been chief executive since 2010 and was in the past with Rensburg Sheppards, BZW and Credit Suisse. Hart has been with Witan since 2015, having previously worked with Cayenne Asset Management and Julius Bar.
The fairly stable leadership team is about to have a shake-up though, with Bell set to retire in the next twelve months, and Witan’s board decided that the fund was due a strategic overhaul, which Bell will oversee before he departs. This may see Witan merge with another investment trust.
Bell has done a good job since he took the reins, with investment returns at nearly 300% in the last 14-years, 23.4 percentage points better than its competitors in the Investment Trust Global sector.
Performance decline
However, of late Witan’s performance has started to decline. In its latest results to end-December 2023, published earlier this week (18th March) the fund returned 12.7% on a Net Asset Value basis, and 10,1% on a share price total return. This was two percentage points behind its benchmark and 10 basis points behind the sector average. Share price discount to NAV was up 2.4% at 7.8%, affected mainly by share buybacks the company had been periodically executing throughout the year.
Bell said: “Our core portfolio managers collectively outperformed during the year, but their contribution was outweighed by weak performance from the GMO Climate Change Investment Fund and by Witan’s direct investments in specialist investment companies. As a result, our overall portfolio returns lagged our benchmark.”
Bell urged patience, saying: “Event risk is always an issue, however hard to evaluate. 2024 sees a record proportion of the world’s population taking part in elections of various kinds. Some might produce changes in a given country, others might have ramifications elsewhere or prompt reactions from other countries. Given unresolved global conflicts and a lack of sure-footed and secure political leadership to handle them, there is no shortage of potential geopolitical shocks. The fact that the days lengthen from December to June does not guarantee trouble-free weather on the way. Consequently, alongside a generally positive view of the world’s medium-term prospects, a heavy dose of watchfulness is warranted.”
Witan Investment Trust top five holdings
| Investment | Weighting | Headquarters |
| GMO Climate Change Fund | 5.7% | Netherlands |
| Amazon NASDAQ:AMZN | 2.8% | USA |
| Apax Global Alpha | 2.3% | UK |
| VH Global Sustainable Equity | 2.2% | UK |
| Vanguard FTSE 250 ETF | 2.2% | UK |
| Source: Witan Investment Trust, 29th February 2024 | ||
Witan is at a crossroads as Bell prepares to pass on the baton, and the board decides the future direction for the fund. It’s going to be a difficult couple of years for the company to navigate and investors may prefer to adopt a wait and see approach in relation to the company’s strategic review.
- Find the latest research for Witan Investment Trust on the AIC website
