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ATST’s core equity strategy continues to deliver in an uncertain environment…by Nicholas Todd




Alliance Trust (ATST) provides investors with a well-balanced, stylistically neutral, global equity portfolio. ATST has delivered good performance versus its benchmark and peer group over the past three years, outperforming by 4.3% and 12.2% respectively (see Performance).

As discussed in Portfolio, ATST aims to offer a ‘core’ investment solution, providing retail investors a rare opportunity to access a sophisticated strategy typically reserved for institutional investors. The trust has been under the supervision of global investment manager Willis Towers Watson (WTW) since 2017, with the portfolio management responsibilities taken on by Craig Baker, Stuart Gray and Mark Davis. The trio boast of access to a unique selection of specialist managers, each entrusted with constructing a bespoke up-to-20-stock best-ideas portfolio, which the team can then allocate to, while minimising factor risks versus a global equity benchmark. Over the past year, good returns from their growthier managers have seen the team trim these positions and reinvest back into the more value-tilted managers.

The managers argue the current environment should continue to benefit stock pickers. However, notwithstanding this, and while performance has recently been good, the managers are wary of the outlook for markets overall and so have reduced Gearing.

In addition to their typically more generalist managers, in July 2023 they added Dalton Investments to their roster, asking them to provide a dedicated Japan allocation. Dalton’s usual value-driven approach is further strengthened by an active engagement strategy aiming to benefit from the country’s corporate governance reforms and a more promising macroeconomic environment.

ATST has delivered 56 consecutive years of Dividend growth, which has averaged 14% over the last five years, aided by 26% and 32% increase for the two previous financial years, producing a historic yield of 2.4%. The consistency is also reflected in ATST’s Discount, which at 6.7% remains consistent with its long-term average.


Analyst’s View


In our view, ATST remains a strong ‘fire and forget’ option for investors looking to gain a broad exposure to global equity markets. The managers’ style-balanced approach has delivered strong returns over what has been a volatile period, which we believe highlights the potential merits of taking a factor-neutral approach and focusing on stock picking instead of reading the tea leaves.

The addition of the Dalton Investments team in Japan is interesting, and provides shareholders with the potential to benefit from the revolution in corporate governance which has contributed to Japan becoming a popular pick amongst active managers this year. In our view, the strategy of focusing on corporate change to deliver returns offers the potential to generate attractive returns even in a troubled economic outlook.

We note the board is in a strong position to continue its track record of rising the dividend each year, a bumper year for earnings having led to a very healthy reserve position. With a yield of around 2.4% at the time of writing the trust is edging closer to contributing a meaningful amount of income, while the compounding effect of reinvesting the dividend offers an attractive way to invest for the long term.




  • Strong short- and long-term performance track record versus benchmark and global peers
  • Offers exposure to specialist managers through WTW’s institutional style investment strategy
  • Dividend profile has continued to improve, and is supported by vast revenue reserves



  • May underperform during trend-driven markets
  • As a core investment strategy, it can offer less diversification benefits relative to more specialist equity strategies
  • Gearing can enhance losses on the downside, although it has been reduced


See the full research on ATST here >
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Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Alliance Trust. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

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