Insider view: Andrew Bell, manager of Witan investment trustSaturday, 04 August 2018
Andrew Bell launched a big shake-up of the Witan investment trust after he took over as manager in 2010. He changed 5 of the 13 managers in the 100-year-old global trust, which had been turned into a multimanager operation in 2004.
The idea behind a multimanager approach is that the overall manager allocates money to experts in specialist areas, in this case Europe, the UK and the US. You benefit from a variety of investment styles, so you are not betting the ranch on any particular style.
Mr Bell reserves 12.5 per cent of the portfolio for management by his own team. “We are free to invest wherever we like and we tend to put the money in specialist areas, where our other managers may not have much invested. At the moment our money is largely in biotech and private equity.”
When it comes to picking the other managers Mr Bell looks for people who are good stockpickers in a specialist field. “We are not particularly worried whether they come with the label of a growth manager or a value manager, we just want people who do a good job. Having said that, we wouldn’t want all our managers to have the same style as that would unbalance the boat.”
He is well aware of the criticism that adopting a multimanager approach means you may end up with an average of the different managers’ performance. He says: “We would call it a smoothing effect. By having a variety of managers you smooth out the ups and downs, but you also have a degree of managers cancelling each other out. By picking very good specialist managers we aim to get smooth returns, but also good returns.”
Witan’s performance over the past five years has been solid and above average. It has returned 97.9 per cent against a sector average of 93.6 per cent, ranking it 8 out of 21 trusts in its sector.
The three-year figures are less encouraging, with a return of 50.8 per cent against a sector average of 62.7 per cent, putting the trust 14th out of 21. Mr Bell says: “The figures for the entire global sector are slightly skewed by the outstanding performance of Scottish Mortgage, which has overshadowed everything else. Witan’s performance over the past couple of years has also been dragged down because we have more money in the UK than most of our rivals — 35 per cent — and the UK has underperformed since the Brexit vote. We think the UK now looks attractive on its comparatively low valuation.”
One of Mr Bell’s favourite stocks from his section of the portfolio is Syncona. “This is a fund that was set up to back small healthcare companies at a very early stage of development and continue funding them until they become a fully-fledged company. The fund managers are not interested in selling to a US company at the first opportunity. The share price has almost doubled in the past two years.”
A less successful investment has been NB Distressed Debt. Mr Bell says: “This invests in the debt of companies in difficulty and aims to make a profit when they recover or are liquidated.
However, some of the companies it has invested in have proved slower to recover than expected and we have made only a small profit.”
Although Witan is not labelled as an income fund, Mr Bell says dividends are a crucial part of Witan’s overall operation. “First, the payment of dividends is vital proof that a company is making sufficient profit to be able to afford the payouts. Second, a large proportion of our investors rely on the dividends that we pay to make up a substantial part of their income. We would rather hold a stock that yields 2 per cent, but is growing its dividend, to one that pays 4 per cent and is going nowhere.”
Looking to the future he is quite positive about global markets, despite threats of trade wars. “I think that while Trump may negotiate by foghorn he will, in the end, pull back from doing anything that seriously damages world trade.”
By Mark Atherton, The Times, first published on 04 August 2018