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Transcript of ALLIANCE TRUST INVESTMENTSALLIANCE TRUST PLCALLIANCE TRUST SAVINGS Alliance Trust PLC Avrio Anoikti...
ALLIANCE TRUST INVESTMENTS ALLIANCE TRUST PLC ALLIANCE TRUST SAVINGS
Alliance Trust PLCAvrio Anoikti Society:
Investment Strategy & Portfolio Diversification
Karen McNab
Alex Ebeling
Rebecca Fenton
March 2012
2
Avrio Anoikti Society: Session Content
1. Alliance Trust, Company Overview Karen McNab
2. Investment Strategy Alex Ebeling
3. Asset Allocation Rebecca Fenton
4. Starting Your Own Portfolio
3
Alliance Trust - What We Do
• Alliance Trust PLC is a self-managed investment trust
• A FTSE 250 company
• It has been investing since 1888
• It is the largest generalist UK investment trust by market value on the London Stock Exchange
• Current shareholder base of 593,301,146
4
Alliance Trust - Structure
5
What is an Investment Trust?
A Collective Investment Vehicle where:
• Investors capital is pooled together from a fixed number of shares.Hence, investment trusts are known as a closed-ended funds.
• Capital is managed either in house or outsourced, the manager invests these funds in different asset classes across the globe.
• They are traded on stock exchanges - ours is listed on the LSE.
• They can borrow a large percentage of capital from banks to leverage positions; this is called gearing.
6
Alliance Trust Investments
• Launched in February 2009
• Since launch has raised in excess of £380 Million
• Provides a range of core, long term investment funds (OEICs)
• 5 Equity Funds: North America, Japan, Asia Pacific (ex-Japan), Europe, UK and Global.
• 1 Fixed Income Fund: Monthly Income Bond Fund
• Managed by highly experienced, tight-knit investment teams
7
Alliance Trust Savings
• ATS is a leading wealth products and platform provider.
• ATS offers access to a wide range of investment opportunities including:
• Funds • Global Equities• Investment Trusts
• These investments can be held in a range of ‘wrap’ accounts including:
• SIPP’s (Self Invested Personal Pension)• ISA’s (Individual Savings Account) • Investment Dealing Accounts
• Exchange Traded Funds • Fixed Interest Securities• Property
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Investment StrategyHigh Level Overview
• Active vs. Passive Management
• Top Down vs. Bottom Up
• Value vs. Growth
• Asset Class
• Gearing
• Hedging (Derivatives)
• Short Term vs. Long Term
• Open vs. Closed Ended
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Investment StrategyAlliance Trust Portfolio Review
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Investment StrategyGlobal Thematic Opportunities Fund
• Unconstrained
• Any Region, Sector, Market Cap or Benchmark etc.
• Identifying Structural Themes
• E.g. Demographic or Environmental changes
• Exploit Short-Term Overreactions
• Benchmarked against the MSCI All Country World Index
11
Global Thematic Opportunities Fund Example of Structural Themes
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Investment StrategyUK Equity Income Fund
• Focus on capital growth and income generation.
• Concentrated portfolio, constrained by a high dividend bias.
• Provides dual return to investors through regular income payments and the prospect of capital accumulation.
• Benchmarked against the FTSE All Share
13
Asset Allocation
• Equity exposure concentrates on four geographical regions:
- UK
- North America
- Europe
- Asia
• Continual work on streamlining portfolio to deliver improved investment performance
14
Geographical Split – percentage of assets
15
Geographical weights in relation to index
44
17
14
25
32
33
22
17
46
8.2
0
5
10
15
20
25
30
35
40
45
50
UK North America Europe Ex UK Asia Global EmergingMarkets
Weights Alliance Trust
Weights FSTE All World Index
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Geographical Weight / Revenue Split
17
Holdings
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Top 10 Holdings
StockCountry of
Listing SectorValue
£m% of Quoted
Equities
Royal Dutch Shell UK Oil & Gas Producers 67.1 2.90%
GlaxoSmithKline UKPharmaceuticals &
Biotechnology 58.3 2.50%
BP UK Oil & Gas Producers 50.8 2.20%
HSBC UK Banks 44.6 2.00%
Rio Tinto UK Mining 42.7 1.80%
British American Tobacco UK Tobacco 38.8 1.70%
BHP Billiton UK/Australia Mining 38 1.60%
BG UK Oil & Gas Producers 37.3 1.60%
Pfizer USAPharmaceuticals &
Biotechnology 35.5 1.50%
Diageo UK Beverages 31.8 1.40%
19
Derivatives & Hedging
• Use derivative instruments to hedge, enhance and protect positions, including currency exposures
• Limited to assisting with market timing for efficient portfolio management• Typically invest in futures in order to adjust regional weightings• Currency fluctuations can have a significant impact on the value of overseas holdings
- Monitor movements
- Take action to protect against them• Example
- Borrow in Euros with the view the currency would weaken
- Reduces exposure to weakening Euro and protects value of our underlying equity holdings
- Forward exchange contract to the Japanese Yen
- When UK Pound strong, increase weighting to US Dollar, unwind as Pound weakened
- Strategies added to performance
20
Starting Your Own Portfolio
• Stick to sectors and companies you know about!
• Try to take a top-down and bottom-up point of view.
• Keep current equity market trends in mind.
• Avoid stock tips from newspapers and popular publications.