Witan Invstment Trust’s NAV total return per share was -10.3% in 2022; dividend increased for the 48th consecutive year

Wednesday, 15 March 2023

A summary of the results is below:

  • Full-year NAV total return of -10.3%. Share price total return -9.8%
  • The benchmark returned -6.2% and the AIC Global sector -20.4%
  • Ten-year NAV total return of 159%, compared with 158% for the benchmark
  • £10.9m NAV uplift from share buybacks offset the majority of the Company’s ongoing charges during the year
  • Dividend increased by 3.6% to 5.80 pence, more than double that paid in 2012 and an unbroken run of increases since 1974
  • Devised and implemented a proprietary rating system for monitoring our portfolio companies’ progress towards our 2030 sustainability target
  • 2023 NAV total return to 10/03/2023 is +5.6%, 3.6% ahead of the benchmark return of 2.0%

Witan Investment Trust (“Witan”) announces its full year results with a NAV total return in 2022 of -10.3%, which was 4.1% behind the benchmark which returned -6.2%. The share price total return was -9.8%.  This was more than entirely suffered during the market’s immediate reaction to the Russian invasion of Ukraine, as the remaining ten months of the year saw the portfolio recover around one third of the initial setback in both absolute and relative terms.

Gearing was a drag on returns for the first half of the year, when the NAV hit its low point, but this was mitigated by a positive contribution during the second half of the year.

As in 2021, Witan benefited from taking advantage of the widening in the discount to buy back 7.9% of its shares, which generated an uplift in NAV of £10.9 million, offsetting the majority of our ongoing charges. In addition, the rise in gilt yields, while weighing on equity market performance, reduced the fair value of our fixed-rate debt, thus benefiting the NAV.

Witan paid three quarterly dividends of 1.40 pence per share in respect of 2022 which, together with the fourth interim dividend of 1.60 pence per share, increases the total distribution for the year to 5.80 pence. This marks the 48th consecutive year of dividend growth.

Andrew Ross, Chairman of Witan Investment Trust plc said:

“2022 was expected to be a year of continuing recovery, as the world left behind the earlier restrictions introduced to control the pandemic. In the event, a surge in inflation, exacerbated by Russia’s invasion of Ukraine, forced central banks worldwide to raise interest rates sharply, reversing hopes for an economic rebound.

At the start of the year, our portfolio reflected expectations of a broadening economic recovery. The consequences of the unforeseen onset of war therefore had a particularly negative impact on Witan’s performance. Our NAV total return in the first nine weeks of 2022 was -15%, 6% behind the benchmark’s return. During the rest of the year, Witan recovered some of the lost ground, ending the year with a total return of -10.3%, 4.1% behind the benchmark’s loss of 6.2%. Whilst it is disappointing that we underperformed over the year as a whole, we outperformed the AIC Global Growth sector after lagging it in recent years.

The improvement in performance has accelerated during the early months of 2023. Whilst this is a short period, Witan’s NAV total return to 10/03/2023 is +5.6%, 3.6% ahead of our benchmark’s return of 2.0%.

The 33% recovery in revenue earnings enabled Witan to deliver a 48th consecutive dividend increase, while improving dividend cover and halving the call on revenue reserves.

Following Witan’s commitment for its portfolio to consist entirely of sustainable businesses by 2030, we have devised a proprietary system for assessing our portfolio companies on a range of sustainability criteria. This provides a structured way for us and our managers to measure progress and engage with investee companies.

Over the long-term, since adopting a multi-manager approach in 2004, we have beaten the returns on our benchmark and raised the dividend well ahead of the rate of inflation. Even after underperformance since 2020, over the ten years to the end of 2022 Witan achieved a NAV total return of 159% and a share price total return of 180%, compared with the benchmark’s 158% return and (with inflation now back on investors’ radar) well ahead of the 30% rise in the UK consumer price index.”

Andrew Bell, Chief Executive Officer of Witan Investment Trust plc said:

“2022 was the end of an era in economic policy terms. A prolonged period of low interest rates had fostered speculative conditions in a range of investment markets. Rising interest rates forced a rethink. One eye-catching statistic is that the price of the longest dated UK Index-linked gilt (a security with a government guarantee of inflation protection) fell by more than the price of bitcoin (which carries no guarantees of anything) – a reminder that “safety” rests upon the price paid, not simply the product characteristics.

A year ago, despite the uncertainties created by Russia’s aggression, our managers believed that being positioned for a recovery from the Covid-19 pandemic and the prospect of a broadening economic recovery remained appropriate, although the timing had become less certain, and the risks had increased. So far, this has been borne out by the subsequent recovery in performance.

2023 began with interest rates and economies poised close to potential turning points. In the case of rates, we may be near a peak, even if the shape is likely to be more like Table Mountain than the Matterhorn. In the case of economies, the interesting question is when the headwinds from energy prices are overcome by the tailwind from China’s reopening. Longer-term, meeting the demands of the sustainable energy transition, building resilience into supply chains and a greater priority on defence are all potential drivers of higher investment spending in the years ahead.

“Setbacks in investment markets are rarely welcomed by those whose savings are impacted but they produce the platform from which better longer-terms can be achieved. With 2023 having begun at a time of difficulty for many and widespread pessimism about the future, there is a risk that some of the longer-term positive drivers for growth in coming years are being overlooked.”

A video interview with Andrew Bell, Chief Executive Officer of Witan Investment Trust, discussing the 2022 full year results and the current outlook is available on the Company’s website at www.witan.com/witan-full-year-results-2022.

- ENDS –

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]

Isabella Seekings, 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 £1.8bn (source: Witan, as at 28.02.2023) on behalf of over 20,000 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 FRN 446227 on 10/03/23. 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 31st December each year. Total return includes the notional investment 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. For more information go to www.witan.com/support/legal-information.