Number of stocks in Alliance Trust to halve
Head of equities Ilario di Bon said the number of stocks held in the trust is being slashed from its current level of roughly 200 to less than 100 – creating a far more concentrated portfolio.
The trust will adopt more of a ‘buy and hold’ philosophy of investing in companies that the managers say are positioned to outperform the wider market in the longer term, rather than attempting to time short-term market shifts.
As part of this the team will focus strictly on ‘bottom-up’ share price factors, focusing on individual companies and paying less attention to macroeconomic drivers of markets, such as monetary policy, Mr di Bon added. “The trust will now be, first and foremost, a bottom-up, stockpicking fund,” he said.
Mr di Bon spoke to Investment Adviser after the trust announced it was restructuring its investment teams under his control, and promoting him from his current role as head of global equities.
Last year the trust – which is still headed by chief executive Katherine Garrett-Cox – came under fire from activist investors, after a period of underperformance led to its shares trading at a wide discount to the value of its assets.
Stephen Peters, analyst at Charles Stanley, said the shift to a more concentrated portfolio, with a focus on bottom-up stock selection “makes perfect sense”. “It is good that they have made these changes and I support what they are doing,” he said.
“However, they are not giving any reason at the moment to put the trust on a buy list. There is too much history there. Time will tell.”
In the five years to July 12, the trust’s share price total return was a third-quartile 4.3 per cent gain, compared with the AIC Global Growth sector average return of 7.4 per cent, according to Morningstar.