Witan Investment Trust results 2017 – Witan Investment Trust outperformed by 3.9% in 2017

In 2017, Witan Investment Trust achieved a net asset value total return of 19.0% outperforming the benchmark* return of 15.1% and increased its dividend by 10.5% to 21.0p, the 43rd consecutive annual rise. 

The highlights of the results are: 

•    The Net Asset Value (NAV) total return of 19% outperformed the benchmark’s* return of 15.1% by 3.9%
•    The share price total return was 22.1%, as the discount narrowed to 1.6% at the year-end (2016: discount of 4.0%)
•    The NAV total return over the last five years of 115% is 28% ahead of the benchmark’s 86.6%*
•    2.8m shares were bought back at narrow discounts to NAV
•    £30m of long-term debt was issued at a fixed rate of 2.74%
•    The dividend increased by 10.5% to 21.0p, more than double the level in 2007 and the 43rd consecutive annual rise  

Harry Henderson, Chairman of Witan Investment Trust said:

“Witan has been operating a multi-manager approach since 2004. Over this period we have beaten the returns on our equity benchmark and raised the dividend significantly faster than the rate of inflation. We will strive to extend this record. 

With inflation subdued, interest rates low and corporate earnings rising, the backdrop for equity markets was generally positive. Our investment portfolio benefited from this environment, outperforming the benchmark. Witan’s dividend rose by 10.5%, 7.5% ahead of the inflation rate of 3% in the year to December 2017. This was the 43rd consecutive annual rise and £5.5m was also added to revenue reserves. 

In 2017 Witan continued to buy back shares at discounts between 6% and 1.5% adding £0.9m to the net asset value for remaining shareholders and contributing to a reduction in the discount from 4% at the end of 2016 to 1.6% at the end of 2017.”

 

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

”Our external managers as a whole beat their benchmarks in 2017, which was a good year for active management.

2018 seems set to be another year of broadly-based, steady but not especially rapid, global economic growth. Whilst this should be supportive of growth in profits, bond and equity markets may be vulnerable if currently benign inflation assumptions are disappointed. There are several potential risks.

The enactment of a significant programme of tax cuts in the US at the end of 2017 will potentially boost growth at a time when there is limited spare capacity in the US economy. The success of oil producers in restraining output has pushed oil prices up which, unless the move is reversed, will increase energy costs for oil users. Increased cost pressures may reduce corporate profits, given the widespread lack of pricing power as a result of globalisation and the disruptive effect of technological change. Central banks might react to higher than expected inflation with faster than expected rate rises. 

A further factor is that reducing central bank bond purchases will progressively weigh on the balance between supply and demand in government bond markets which, other things being equal, will exert upward pressure on yields.

These developments will be monitored carefully. Although moderate rises in inflation, interest rates and bond yields can coincide with healthy economic growth and rising equity markets, watchfulness is called for given the degree of investor optimism reflected in equity valuations. The volatile market conditions that appeared in early February were a reminder of the need for optimism on growth to be tempered by realism on valuations amid bond-market nervousness concerning possible inflation risks. 

The improvement in economic growth should allow corporate profits to catch up with the expectation built into equity valuations. Assuming that rises in bond yields are moderate, equity ratings continue to look competitive with the returns offered from bonds and cash. Equity ratings are high by historic standards, but interest rates are extraordinarily low. The changes made over the past year increase the stock specific focus of the portfolio, at a time when index valuations offer few windfalls.”


 A video interview with Andrew Bell, Chief Executive Officer of Witan Investment Trust, discussing the 2017 full year results can be viewed on the Company’s website at https://www.witan.com/video-centre/witan-full-year-results-2017.

 

- ENDS –

 

* Witan Investment Trust’s benchmark is a composite of the following equity regions: UK 30%, North America 25%, Europe (ex UK) 20%, Asia Pacific 20% and Emerging Markets 5%. From 01.10.2007 until 31.12.2016, Witan’s benchmark was a composite of UK 40%, North America 20%, Europe (ex UK) 20% and Asia Pacific 20%. 

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 £2.1bn (source: Witan, as at 28.02.2018) on behalf of over 25,000 investors. Witan operates a multi-manager structure and currently has 10 appointed managers. For further details please visit www.witan.com.