Witan Investment Trust’s NAV per share fell 14.7% in the first half of 2020

Tuesday, 11 August 2020

A summary of the results is below:

  • The Net Asset Value (NAV) total return of -14.7% underperformed the benchmark’s** return of -2.1% by 12.6%
  • The share price total return was -19.2%, as the discount widened to 5.9% at 30th June (2019: discount of 0.7%)
  • A second interim quarterly dividend of 1.34p per ordinary share will be paid in September. Total dividends paid in respect of the period are 2.68p per ordinary share (2019: 2.35p)
  • 5m shares (2.4%) were bought into treasury at an average discount of 5.8%
  • The portfolio was restructured to reflect the new global orientation

Andrew Ross, Chairman of Witan Investment Trust said:

“It is something of an understatement to say that the world in 2020 has turned out to be very different from initial expectations. It was truly a half of two quarters, as the FTSE All World Index experienced a dramatic fall in February and March and an equally dramatic recovery from April onwards. However, there was a notable contrast between the US equity market (heavily weighted in technology companies), which rose almost 4%, and declines in other markets, particularly the UK which suffered a loss of over 17%.

Our NAV total return in the first half of the year was -14.7%, more than 12% behind the benchmark return of -2.1%. This was atypical and clearly disappointing, for which our CEO gave a frank explanation of the causes to shareholders in early June. The damage was all done in the first quarter. During the second quarter, performance improved with modest outperformance achieved from mid-May onwards.

As announced in late 2019, we altered our strategic asset allocation in January 2020 to 85% Global, 15% UK (81% non-UK on a look-through basis). As part of this move, we closed our two specialist European mandates at the end of April, increasing our allocation to global managers. We expect an enduring effect from the Covid-19 epidemic to be an acceleration of the growth prospects for information technology and biotechnology and less predictable futures for many cyclical sectors. Accordingly, we sold our only systematic deep value global portfolio (managed by Pzena) in May.

Since the period end, the UK portfolio mandate with Heronbridge is in the process of being closed and we have appointed two additional global managers, both based in the US and focused on less cyclical and more rapidly growing companies. WCM Investment Management, based in California, is being allocated 9% of assets and Jennison Associates, based in New York, has been allocated 4.5%. Details of their respective styles and investment approaches will be added to Witan’s website shortly.

Changes in manager allocations in 2020 have amounted in total to around one third of the portfolio, reflecting our revised strategic assessment of the best long-term opportunities for shareholders as well as our response to economic changes arising from this exceptional period.

The Company’s revenue earnings per share for 2020 are likely to be around half of the level earned in 2019, owing to the unprecedented cuts in market dividends by companies seeking to conserve cash during the COVID-19 lockdown, particularly in the UK. The Company began 2020 with revenue reserves amounting to over 1.5 times the annual dividend, having added to these reserves in each of the past nine years. Consequently, it is able to take advantage of investment trusts’ ability to smooth dividend pay-outs using revenue reserves and has stated its willingness to do so. The Board’s policy remains to grow the dividend each year and the full year’s dividend for 2020 is expected to show a further year of growth.

Witan has a balanced and diversified portfolio, with more exposure to faster-growing regions and sectors than was provided by our previous asset allocation. The exceptional factors linked to COVID-19 will not last forever and we are confident that, after the disappointing losses experienced during the early part of 2020, our restructured portfolio will reward our investors (existing and new) at the net asset value level and in terms of a recovering discount.”

A video interview with Andrew Bell, Chief Executive Officer of Witan Investment Trust, discussing the 2020 half year results and the current outlook is available on the Company’s website at here.

For further information please contact:

Andrew Bell, Chief Executive Officer
Witan Investment Trust plc
Tel:020 7227 9770
[email protected]

James Hart, Investment Director
Witan Investment Trust plc
Tel:020 7227 9770
[email protected]

Alexis Barling, Director of Marketing
Witan Investment Trust plc
Tel:020 7227 9770
[email protected]

-----

Notes to Editors 

Witan Investment Trust plc

Established in 1909, Witan is one of the UK's largest investment trusts, managing £1.7bn (source: Witan, as at 30.06.2020) on behalf of over 25,000 investors. Witan operates a multi-manager structure and currently has 8 principal managers. For further details please visit www.witan.com.

Issued and approved by Witan Investment Services Limited. Witan Investment Trust is an equity investment. Please remember that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise as a result of currency and market fluctuations and you may not get back the amount originally invested.

Discrete Performance*

* Source: Morningstar, percentage growth to 30th June each year. Total return includes the notional investment of dividends.

Relative numbers may not add up due to rounding.
† Source: Morningstar / Witan total return includes the notional reinvestment of dividends.
‡ The Net Asset Value figures value debt at fair value and include the notional reinvestment of dividends.
# Witan’s benchmark is a composite of 85% Global (MSCI All Country World Index) and 15% UK (MSCI UK IMI Index). From 01.01.2017 to 31.12.2019 the benchmark was 30% UK, 25% North America, 20% Asia Pacific, 20% Europe (ex UK), 5% Emerging Markets. From 01.10.2007 to 31.12.2016 the benchmark was 40% UK, 20% North America, 20% Europe (ex UK) and 20% Asia Pacific.
With effect from August 2020, the source for benchmark index performance changed to MSCI International, replacing the previous FTSE source.
For more information go to www.witan.com/support/legal-information.