Andrew Bell, chief executive of the £2.08bn Witan Investment Trust, has defended the substantial exposure it has to UK equities, despite its global mandate.
The Witan Investment Trust is 38 per cent invested in the UK. Some of its peers have almost zero in UK equities.
Fund manager Mark Whitehead, who runs the £221m Securities Trust of Scotland, a global investment trust, said most UK investors have too much of their wealth allocated to the UK.
But Mr Bell said as most of the investors in the trust are UK-based, and so have bills to pay and liabilities to meet in sterling, so exposure to sterling assets minimises currency risk.
He added that most UK-based investors would have a higher level of knowledge of UK assets, which he feels provides a measure of “comfort” and knowledge to investors of how their assets are performing, relative to capital deployed in other markets.
Witan is a fund of funds, and Mr Bell said some of the investments are UK-listed investment trusts in niche areas such private equity. He said those trusts are listed on the UK stock exchange, but the underlying assets of those vehicles are much more global in nature.
Those trusts form part of the 10 per cent of Witan which Mr Bell said is the “special situations” part of the portfolio.
The UK funds in which he has invested are the £4.2bn Lindsell Train UK Equity fund managed by Nick Train, the £957m Artemis UK Special Situations fund, run by Derek Stuart, and the £91m Livingbridge UK Micro-Cap fund.
He said the three funds have very different strategies, with Lindsell Train focused on long-term growth stocks, Artemis Special Situations being a deep value fund, and Livingbridge a smaller companies fund.
Mr Bell believes the very different strategies deployed by these fund managers means the performance of the UK segment of the Witan Trust has lower volatility, as different styles comes in and out of fashion.
The Witan Investment trust does not deploy capital into individual country funds, instead buying global funds and allowing the managers to do the asset allocation. Some of the capital listed as invested in the UK is actually held in the global funds, with the managers having chosen to invest in UK companies.
Brian Dennehy, who runs the IFA firm Dennehy Weller, said having a range of funds that perform differently from each other is a good way to have protection from market falls.
