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

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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

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Alliance Trust - Structure

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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.

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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

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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

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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

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Asset Allocation

• Equity exposure concentrates on four geographical regions:

- UK

- North America

- Europe

- Asia

• Continual work on streamlining portfolio to deliver improved investment performance

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Geographical Split – percentage of assets

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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

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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%

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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

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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.