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‘We cut British stocks over Christmas’, says century-old investment firm.

By Harry Brennan, The Daily Telegraph. First published 11th January 2020

The Witan Investment Trust has managed money for more than 100 years. First charged with looking after the Henderson family fortune in 1909, it now safeguards £2bn for thousands of savers.

It has increased its dividend every year since 1974 and, over the past decade, has grown payouts by 130pc – four times the rate of inflation and twice the dividend growth of British firms overall.

Next month marks Andrew Bell’s 10th year as chief executive. Telegraph Money asked what’s changed over the past century and why the fund has abandoned British stocks.

What’s new?

We have moved from being predominantly invested in Britain to investing more globally.

In 10 years we could be 100pc global, but that depends on how attractive Britain is in the future.

We used to just have one manager, but since 2004 we have had a multi-manager approach. So I don’t pick stocks. It is my job, along with my team and the company board, to pick a bunch of managers that can do it for us and do it well.

We didn’t come out of the dotcom bubble in good shape, so these days we like to have a blend of managers to balance the portfolio. Some will do badly some years while others do well. This allows you to smooth out some of the peaks and troughs of the market. It means the chances of a stellar year are reduced, but the chances of a really awful year are cut, too.

How do you hire managers and when do you fire them?

Our mindset is to choose managers we think we will be happy with through various economic cycles; people with conviction who can deliver over the long run. We don’t like to change things up too much and we won’t fire someone if they are going through a bad patch. We are not trying to time things like hiring a defensive manager because we think there is a recession coming, for example. It’s expensive and involves a lot of guesswork.

We sack a manager when we lose confidence in them. So if their performance is way off for a good while, if their top manager leaves the firm or if their style changes a lot. Most of our managers are on a notice period of a month.

We might hire a brand new manager if we think there is something going on in the world that we are not yet profiting from. So if we thought, hypothetically speaking, it was a good idea to start investing in emerging markets or climate change issues, not yet represented in the portfolio, we would start the search.

Multi-manager funds tend to be costly. Do you offer value for money?

The ongoing charge investors pay is about 0.75 to 0.8pc. It’s not the cheapest. Clearly if we had just one manager we could cut costs, but our guiding light is that we try to choose the managers we want and then try to get them as cheaply as possible. This is opposed to starting with the cheapest pool of managers first, who may well be cheap for a reason. We are vindicated when our managers trump the performance of rival funds even after fees are taken into account.

What were your best and your worst investments?

Lindsell Train has been our best-performing manager, with average returns each year of more than 15pc over the past decade – more than double the market as a whole. We just changed the mandate from investing mainly in Britain to investing more globally over Christmas. We waited until after the election, when the pound rallied and we had more buying power to access shares overseas.

The worst? A small fund called Ludgate Environmental, which invested in unquoted environmental companies. We invested £4.5m at 97p a share in September 2010. We ended up getting just £1.8m back, losing 60pc.

Do you have money in the fund?

Around 700,000 shares, which currently cost about £2 apiece.

What’s the incentive?

I get a generous annual bonus on top of basic salary, which can be as much as 90pc of my wage if the value of the assets we own goes up substantially. Around 40pc is deferred over three years and can be clawed back if performance is bad.

What would you have been if not a money manager?

I spent 10 years working for Shell in industrial and tribal relations in an earlier life, so I’d probably still be in Oman or somewhere, negotiating over oil and jobs with the local population.



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