PORTFOLIO UPDATE APRIL 2020 - Alliance Trust€¦ · Alliance Trust equity portfolio returns are...

CRAIG BAKERGLOBAL CIO, WILLIS TOWERS WATSON

PORTFOLIO UPDATE

APRIL 2020

© 2020 Willis Towers Watson. All rights reserved. Proprietary and confidential.

STUART GRAYCO-PORTFOLIO MANAGER, WILLIS TOWERS WATSON

W I L L I S T O W E R S W A T S O N I N V E S T M E N T T E A M

2

Source: Willis Towers Watson. As at 31 December 2019.

STUART GRAYCo-Portfolio Manager

Investment Committee Member

CRAIG BAKERGlobal CIO

Chair of Investment Committee

MARK DAVISCo-Portfolio Manager

Investment Committee Member

Global Research AssociatesOperations and Support

Associates

Portfolio Management Team

Associates

109 219 21

Years of Investment Experience

25 16 21 21

MARIA MUSIELASenior Client Lead


REVIEW OF 2019

2 0 1 9 : K E Y M E S S A G E S

• Alliance Trust outperformed in 2019, despite headwinds for active managers; portfolio also

ahead of benchmark and peers since Willis Towers Watson became investment manager

in April 2017

• Share price discount to Net Asset Value (NAV) reduced to -4.1% at year-end from -4.9% at

end of 2018

• Buybacks reduced again over 2019

• Business simplification completed; remaining disciplined on costs

• Well positioned to be a core holding for all generations of investors

• Dividend increased by 3% to 13.96p, the 53rd consecutive annual rise

4

Source: Willis Towers Watson, February 2020.


D I V I D E N D I N C R E A S E D F O R 5 3 R D C O N S E C U T I V E Y E A R

5

Source: Willis Towers Watson, Alliance Trust, DPS: Dividend per share

▪ Fourth interim dividend of 3.49p per share, bringing total for the year to 13.96p, a 3% increase on 2018

▪ The 53rd consecutive annual increase

▪ Revenue reserves of £109.2m, more than 2x 2019’s pay-out, to increase by an additional £645.3m if conversion

of merger reserve is approved by shareholders and court

0

2

4

6

8

10

12

14

16

18

20

0

5,000

10,000

15,000

20,000

25,000

1968 1973 1978 1983 1988 1993 1998 2003 2008 2012 2017

Div

iden

d p

er

sh

are

(p

)

DPS (p) - rhs Capital Return Total Return


Past performance is not a reliable indicator of future returns.

6

P E R F O R M A N C E S U M M A R Y

Past performance is not a reliable indicator of future returns.Sources: Investment Performance data is provided by BNY Mellon Performance & Risk Analytics Europe Limited, Morningstar and MSCI Inc.

Notes: All data is provided as at 31 December 2019. Figures may be subject to rounding differences. The benchmark shown is the MSCI All Country World Index Net Dividends Reinvested. NAV Total Return figures are based

on NAV including income with debt at fair value. Alliance Trust equity portfolio returns are before fees. Peer Group Source: Morningstar. The peer group is the Morningstar universe of UK retail global equity funds (open ended

and closed ended) with performance net of fees. P.a. outperformance calculated arithmetically.

24.3% 23.1% 22.9% 21.7% 22.4%

5%

10%

15%

20%

25%

30%

35%

Total ShareholderReturn

NAV Total Return Equity PortfolioTotal Return(before fees)

MSCI ACWI Peer Group Median

Pe

rfo

rma

nc

e

Alliance Trust Benchmark Peer Group

Performance from 1 January 2019 to 31 December 2019

Pro-forma NAV

Total Return

≈


7


28.9% 27.1% 29.2%25.5% 24.4%

5%

10%

15%

20%

25%

30%

35%


NAV Total Return Equity PortfolioTotal Return(before fees)

MSCI ACWI Peer Group Median

Pe

rfo

rma

nc

e


Performance from 1 April 2017 to 31 December 2019

Pro-forma NAV

Total Return

≈



Notes: All data is provided as at 31 December 2019. Figures may be subject to rounding differences. The benchmark shown is the MSCI ACWI Net Dividends Reinvested. NAV Total Return figures are based on NAV including

income with debt at fair value. Alliance Trust equity portfolio returns are before fees. Peer Group Source: Morningstar. The peer group is the Morningstar universe of UK retail global equity funds (open ended and closed ended)

with performance net of fees. P.a. outperformance calculated arithmetically..

UPDATE FOR 2020 CORONAVIRUS CRIS IS

9

W T W R E A C T I O N T O C O R O N A V I R U S


• All colleagues currently working from home

• Regular client updates on performance and portfolio positioning

• Additional investment due diligence on the managers’ portfolios to understand how they are re-

underwriting each of their holdings to reflect balance sheet strength and future opportunities

• Additional separate operational due diligence on managers to test their business operational issues and

resilience, and Business Continuity Planning effectiveness

✓ All systems working and optimised for critical functions

✓ Additional protocols implemented to provide equipment to support

working from home

✓ Protocols established to build virtual communities, enhance team

communications, and assist colleagues with flexible arrangement

✓ In the event of any public health concern that may potentially lead to a

high rate of colleague absence, WTW will focus available resources

on business processes that directly support client needs.

10

Q 1 2 0 2 0 M A R K E T O V E R V I E W


0

20

40

60

80

100

Apr 2019 Jun 2019 Aug 2019 Oct 2019 Dec 2019 Feb 2020

Crude Oil Falls and Volatility Spikes

CBOE Volatility IndexNY Mercantile Futures - Crude Oil May 2020

-60

-50

-40

-30

-20

-10

0

0 100 200 300 400 500 600 700 800 900

Dra

wdow

n (

%)

Months

S&P 500 Drawdowns Through History

1973 1980 1987 2000 2007 2020

Past performance is not a reliable indicator of future returns.Source: S&P, CBOE, NY Mercantile Exchange, Willis Towers Watson, Data as of 31 March 2020.

2020

1987

11 © 2020 Willis Towers Watson. All rights reserved. Proprietary and confidential.

M A R K E T D R I V E R S F I R S T Q U A R T E R 2 0 2 0

-30%

-25%

-20%

-15%

-10%

-5%

0%

Small Cap Mid Cap Large Cap

Size Performance Q1 2020

MSCI ACWI

-25%

-20%

-15%

-10%

-5%

0%

Value Growth Quality Momentum

Style Performance Q1 2020

MSCI ACWI

-30%

-25%

-20%

-15%

-10%

-5%

0%

NorthAmerica

Europe exUK

UK Japan Pacific exJapan

EmergingMarkets

Regional Performance Q1 2020

MSCI ACWI

-45%

-30%

-15%

0%

Sector Performance Q1 2020

MSCI ACWI

Past performance is not a reliable indicator of future returns.Source: MSCI, GBP Total Returns, Unhedged. As at 31 March 2020.

A C T I V E M A N A G E M E N T H A S F A C E D H E A D W I N D S O V E R T H E L A S T D E C A D E , P A R T I C U L A R L Y I N 2 0 1 8 , 2 0 1 9 A N D Q 1 2 0 2 0

12

Past performance is not a reliable indicator of future returns.Source: Factset, as at 31 March 2020 MSCI World Price Return (USD) index

2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020

MEDIAN STOCK

RETURN-9.8% 12.5% 22.8% 1.1% -2.7% 4.1% 19.0% -15.0% 20.5% -25.8%

INDEX RETURN -7.6% 13.2% 24.1% 2.9% -2.7% 5.3% 20.1% -10.4% 25.2% -21.4%

ACTIVE

HEADWIND2.2% 0.7% 1.3% 1.8% -0.1% 1.2% 1.1% 4.6% 4.7% 4.4%

This is just for single quarter!



M A R K E T D R I V E R S S I N C E W T W A P P O I N T M E N T

-8%

-4%

0%

4%

8%

NorthAmerica

Europeex UK

UK Japan Pacific exJapan

EmergingMarkets

Regional Performance since 01.04.17

MSCI ACWI

-6%

-4%

-2%

0%

2%

4%

Small Cap Mid Cap Large Cap

Size Performance since 01.04.17

MSCI ACWI

-4%

-2%

0%

2%

4%

6%

8%

10%

Value Growth Quality Momentum

Style Performance since 01.04.17MSCI ACWI

-15%

-10%

-5%

0%

5%

10%

15%

20% Sector Performance since 01.04.17

MSCI ACWI




G R O W I N G D I V I D E B E T W E E N S T Y L E A N D S I Z E F A C T O R S

-22%

-30%

-25%-24%

-19%

-25%

-19%

-12%-10%

-15%

-5%

8%

-7%-9%

5%

29%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

1 Month 3 Months 1 Year 3 Years

MSCI ACWI Small Cap Value MSCI ACWI Small Cap MSCI ACWI Large Cap MSCI ACWI Large Cap Growth

15


Performance to 31 March 2020



Notes: All data is provided as at 31 March 2020. Figures may be subject to rounding differences. The benchmarks shown are the MSCI ACWI Net Dividends Reinvested and the MSCI ACWI Equal Weight Net Dividends

Reinvested in GBP. NAV Total Return figures are based on NAV including income with debt at fair value. Alliance Trust equity portfolio returns are before fees.

-14.0%

-10.9%

-13.3% -13.7%-14.6%

-12.0%

-14.6%

-19.4%

-16.0%

-18.7%

-23.1%

-20.9%

-17.6%

-20.6%

4.2%5.5%

-7.2%

-0.9%

0.6%

6.1%

-7.9%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

EquityPortfolioTotal

Return

MSCI ACWI MSCI ACWIEqual

WeightedIndex

TotalShareholder

Return

NAV TotalReturn

MSCI ACWI10% Levered

MSCI ACWIEqual

Weighted 10%Levered

1 Month 3 Months Since WTW appointment

16




Notes: All data is provided as at 31 March 2020. Figures may be subject to rounding differences. The benchmark shown is the MSCI ACWI Net Dividends Reinvested. NAV Total Return figures are based on NAV including

income with debt at fair value. Alliance Trust equity portfolio returns are before fees. The passive alternative iShares is the BlackRock iShares MSCI ACWI ETF. Peer Group Source: Morningstar. The peer group is the

Morningstar universe of UK retail global equity funds (open ended and closed ended) with performance net of fees. P.a. outperformance calculated arithmetically.

-0.9%

0.6% 4.2%5.5%

-7.2%

5.2%3.3%

-5%

-3%

-1%

1%

3%

5%

7%


NAV Total Return(net of all costs)

Equity PortfolioTotal Return(before fees)

MSCI ACWI MSCI ACWIEqual Weighted

Index

Passivealternative -iShares ETF

Peer GroupMedian

Pe

rfo

rma

nc

e


Performance from 1 April 2017 to 31 March 2020

D I V E R S I F I E D H I G H C O N V I C T I O N D E L I V E R S S M O O T H E R R I D E

17

Source: Investment Performance data is provided by BNY Mellon Performance & Risk Analytics Europe Limited, Morningstar and MSCI Inc. Individual manager and Alliance Trust returns are

benchmarked against MSCI All Country World Index NDR (Net Dividends Reinvested) except for the Emerging Markets manager that is benchmarked against the MSCI Emerging Markets NDR Index.

Alliance Trust equity portfolio returns are before fees. 101/04/17


Relative cumulative performance from Willis Towers Watson’s appointment1 to 31 March 2020

Underlying manager returns vs. benchmark

Alliance Trust equity portfolio (combined) vs. MSCI ACWI


MSCI ACWI Large Cap Growth vs MSCI ACWI

MSCI ACWI Small Cap Value vs MSCI ACWI

-1.2%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Mar 17 Jun 17 Sep 17 Dec 17 Mar 18 Jun 18 Sep 18 Dec 18 Mar 19 Jun 19 Sep 19 Dec 19 Mar 20

Retu

rns r

ela

tive

to

MS

CI

18

K E Y A C T I O N S T A K E N I N T H E P O R T F O L I O D U R I N G Q 1


• Confirmed still comfortable with each of the managers in the portfolio

➢Operational due diligence

➢Challenge on robustness of the companies in their portfolios

➢Attribution of performance between fundamentals and multiple expansion/contraction

➢Challenge on the new opportunities being opened up

• Made minor tweaks to manager weightings

➢Primarily risk management

➢Some profit taking

• Minor increase in gearing levels following market falls

19

S T O C K C H A N G E S I N T H E P O R T F O L I O D U R I N G Q 1


• Stocks purchased

➢Valmet – a Finnish developer and supplier of technologies, automation systems and services

for the pulp, paper and energy industries

➢Heineken – a Dutch brewing company

➢ Iberdrola - a Spanish multinational electric utility company

➢Dell - an American multinational computer technology company

• Stocks sold

➢New Oriental – Chinese provider of private educational services

➢Nielsen - an American information, data and measurement firm

➢Citigroup - an American multinational investment bank and financial services corporation

Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the

purposes of illustration only.

G E A R I N G L E V E L S S I N C E D E C E M B E R 2 0 1 9

20

Source: The Bank of New York Mellon, Willis Towers Watson. Data as at 31 March 2020

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

31/12/2019 14/01/2020 28/01/2020 11/02/2020 25/02/2020 10/03/2020 24/03/2020

Gross Gearing Net Gearing - Central Cash Net Gearing - All Cash


Market bottoms on the 23rd of March

A L L I A N C E T R U S T P O R T F O L I O X - R A Y

21

Past performance is not a reliable indicator of future returns. Source: Willis Towers Watson, March 2020. EPS: Earnings Per Share, ICB: Industry Classification Benchmark

As at 31 March 2020

Breakdown by industry (ICB) (%)

1 3

14 14

10

14

1 0

14

26

31

4 4

12 1113 12

3 4

19 19

0 00

5

10

15

20

25

30

Oil

& G

as

Basic

ma

teria

ls

Industr

ials

Co

nsum

er

go

ods

He

althcare

Co

nsum

er

serv

ices

Tele

com

m-

un

ication

s

Utilit

ies

Fin

ancia

ls

Techn

olo

gy

Ca

sh

Oth

er

Portfolioweight

Benchmarkweight

Breakdown by region (%)

53

1810

4 50 1

70 3 0

60

13

4 8 80 3 4

1 0 00

10

20

30

40

50

60

70

Nort

h A

meri

ca

Eu

rop

e e

x U

K(D

ev)

UK

Jap

an

Asia

Pa

cific

ex

Jap

an (

De

v)

Mid

dle

Ea

st

&A

fric

a (

Dev)

Ad

va

nce

dE

merg

ing

Se

co

nda

ryE

merg

ing

Non

-in

dex

cou

ntr

ies

Cash

& n

on

-e

qu

itie

s

Oth

er

Portfolio weight

Benchmark weight

Style tilt analysis (z-score)

-0.4

0.1

0.0

0.1 0.0 0.1

-0.1 -0.1 0.0

0.1 0.1

0.0 -0.1

-1.2

-0.7

-0.2

0.3

0.8

Siz

e

Retu

rn o

n in

veste

dcap

ital

Retu

rn o

n e

quity

Sa

les g

row

th

Ea

rnin

gs p

er

share

gro

wth

Long-t

erm

EP

S g

row

th

Div

idend / P

rice

Bo

ok / P

rice

Ea

rnin

gs / P

rice

Cash flo

w / P

rice

Sa

les / P

rice

Mo

mentu

m 1

Year

Mo

mentu

m 3

Month

Large

cap

High

quality

High

growth

Cheap Positive

momentum

Size Quality Growth Value Momentum

Net active weight by market cap size

Small Large


-8

-6

-4

-2

0

2

4

6

1 2 3 4 5 6 7 8 9 10

22

Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the

purposes of illustration only. Past performance is not a reliable indicator of future returns.Source: Willis Towers Watson, March 2020.

Country of Listing United States United States China United States United States

Sector Communication

ServicesFinancials

Consumer

Discretionary

Information

Technology

Information

Technology

Number of stock

pickers5 2 2 1 2

Relative position

to the MSCI ACWI+2.4% +1.4% +1.4% +1.3% +1.3%

Country of Listing India United States China United Kingdom United States

Sector FinancialCommunication

Services

Communication

ServicesIndustrials Financials

Number of stock

pickers2 1 1 1 1

Relative position

to the MSCI ACWI+1.2% +1.2% +1.1% +1.0% +1.0%

T O P T E N R E L A T I V E H O L D I N G S A T E N D M A R C H 2 0 2 0


S C E N A R I O S A N D F O R W A R D L O O K I N G R I S K M A N A G E M E N T


Assumptions and expected impacts

Global recovery in Q3 Extended global recession Credit squeeze and defaults

Epidemiology

▪ Public health policy

measures are highly

effective – virus spread

controlled by mid-Q2

▪ Social distancing

measures eased in c. 2

months

▪ Problem transmissions occur

up to Q3. Public health policy

is less effective; control of the

virus and social distancing

easing takes 4 months; with

new cluster cases in localised

areas

▪ Problem transmissions occur

up to Q3. Public health policy

is less effective

▪ New cluster cases continue in

localised waves through the

northern hemisphere winter

China

▪ Recovery in factory

output is largely

complete by early-to-mid

Q2; consumer

confidence recovers in

Q3

▪ Recovery in factory output is

delayed until Q3; consumer

confidence recovers only in

Q4

▪ Recovery in factory output is

delayed until Q3; consumer

confidence recovers only in

Q4

▪ Slower recovery in export

sectors

US and Europe

▪ US and Europe have an

acute contraction until

mid-to-late Q2

▪ Highly effective

government credit

support for households /

businesses

▪ SMEs are most affected;

service sectors (aviation,

travel, tourism) will be

significantly affected

▪ Energy sector affected

by lower oil price to Q3

▪ Global recession over Q1 to

Q3; US and Europe contract

significantly throughout Q2

and Q3

▪ Acute, sustained and broad-

based decline in corporate

earnings in 2020

▪ Large-scale government credit

support for households /

businesses

▪ Consumer confidence does

not recover until Q4

▪ US and Europe contract

through to Q1 2021

▪ A shock to employment,

incomes, and global trade

drives deleveraging given high

debt levels

▪ Company funding and credit

conditions are acutely affected

leading to defaults

▪ Policy is insufficient or

ineffective; economic recovery

is weak from Q2 2021

24

S U M M I N G U P


• Strong absolute and relative returns since WTW appointment to 31 December 2019 despite a significant

headwind against the strategy

➢ Majority of stocks in the benchmark have underperformed significantly

• Sharp declines in markets in Q1 2020 has led to poor absolute returns from a fully invested equity portfolio

➢ Slightly exacerbated for investment trusts given in-built leverage

• Relative return in Q1 2020 also negative

➢ Headwinds even stronger than in previous period

• Small changes made to the portfolio but in general we believe it remains very well placed to profit from any

likely reversal in market leadership

➢ The underlying managers are finding great companies at depressed prices

➢ They are comfortable with the balance sheet strength of their portfolios

➢ Apart from a bias away from mega cap companies we do not have any strong style biases in the portfolio

APPENDIX

A N A T T R A C T I V E P R O P O S I T I O N –D I V E R S I F I E D , H I G H C O N V I C T I O N

Focus on high-conviction

stocks; no passengers!

C O N V I C T I O N

High active share of

around 80% drives

outperformance

Blend of best-in-class1

managers with

complementary styles

R I S K

C O N T R O L

Manager diversification

reduces key man risk and

produces a smoother

return profile

High-quality managers

carefully selected by

Willis Towers Watson

from around the globe

E X C L U S I V E

A C C E S S

UK retail investors can

only access the

managers’ 10-20 best

stock picks through the

Trust

Alliance Trust has a

progressive dividend

policy

D I V I D E N D

G R O W T H

Alliance Trust is one of

only three investment

trusts to increase its

dividend every year for

53 years

Environmental, Social

and Governance factors

are embedded in the

investment process

S U S T A I N A B L E

Integrating responsible

investing should help

manage risk and deliver

better returns


Ongoing charges ratio

target of 0.65% pa or

less2, proving highly

active management

doesn’t have to be

expensive

L O W C O S T

Leading to

higher expected returns

Source: Willis Towers Watson (WTW). 1Best-in-class refers to a Willis Towers Watson rating.2The Ongoing Charges Ratio target of 0.65% is based on NAV reported as at 31 December 2017


27

Source: Willis Towers Watson, February 2020.

N I N E O F T H E B E S T S T O C K - P I C K E R S F R O M A C R O S S T H E W O R L D W I T H D I V E R S E S T Y L E S 1

CANADA

UK

US

UK retail investors can only access these managers’ 10-20 best stock picks through the Trust

G R E G H E R R ,

P I E R R E P Y

First Pacific Advisors

Seeks companies with high-

quality business models, that

exhibit financial strength & strong

management

A N D R E W

W E L L I N G T O NLyrical Asset Management

Focus on businesses with

attractive capital returns and

the flexibility to react to all

phases of the business cycle

B E N

W H I T M O R E

Jupiter Asset Management

Seeks out-of-favour &

under-valued businesses

with prominent franchises

& sound balance sheets

A N D Y

H E A D L E Y

Veritas Asset Management

Thematic investing to identify

companies & industries that

are well positioned to benefit

medium-term growth

H U G H

S E R G E A N T

River & Mercantile Asset Management

Strength in smaller companies

& recovery situations

identifying value at different

stages of a company’s lifecycle

C . T

F I T Z P A T R I C K

Vulcan Value Partners

Focus on finding quality

businesses that have the

ability to compound in value

over the long term.

G E O R G E F R A I S E ,

R O B R O H N ,

G O R D O N M A R C H A N D

Sustainable Growth Advisers

Seeks companies that have strong

pricing power, recurring revenue

generation & long runways of growth

R A J I V J A I N

GQG Partners

Looks for high-quality &

sustainable businesses

whose strengths should

outweigh the macro

environment

A N D R E W

W E L L I N G T O N

Lyrical Asset Management

Focus on businesses with

attractive capital returns &

flexibility to react to all phases

of the business cycle

B I L L K A N K O

Black Creek Investment

Management

Value-orientated buyers of

leading businesses. Long-

term contrarian approach


H I G H C O N V I C T I O N A N D H I G H A C T I V E S H A R E D R I V E O U T P E R F O R M A N C E


Incre

asin

g o

utp

erf

orm

an

ce

Higher conviction portfolios

Ave

rag

e A

nn

ua

lise

d A

lpha

(%

)

-0.3 -0.3

-0.5

-0.1 -0.1

0.2

0.0

0.70.8

1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1 (Lowest) 2 3 4 5 6 7 8 9 10(Highest)

Deciles of Active Risk

Own less of this

Own more of this

More stocks Fewer stocks

Past performance is not a reliable indicator of future returns.Source: Sebastian & Attaluri, Conviction in Equity Investing, The Journal of Portfolio Management, Summer 2014

29

Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes

of illustration only. Past performance is not a reliable indicator of future returns.

S T O C K L E V E L A T T R I B U T I O N Q 1 2 0 2 0

Name Country Sector

Active

Average

Weight

Annualised

Total Return in

Sterling

Performance

Attribution

Effect

TOP 5 CONTRIBUTORS

NVIDIA Corporation United States Information Technology 1.0% 20% 0.4%

Alphabet Inc United States Communication Services 2.6% -7% 0.2%

Ubisoft Entertainment SA France Communication Services 0.7% 14% 0.2%

Amazon.com Inc United States Consumer Discretionary 0.6% 13% 0.2%

Alibaba Group Holding China Consumer Discretionary 1.2% -2% 0.2%

TOP 5 DETRACTORS

Airbus SE France Industrials 1.4% -53% -0.6%

HDFC Bank Limited India Financials 1.3% -32% -0.3%

AerCap Holdings NV Netherlands Industrials 0.7% -60% -0.3%

Capita plc United Kingdom Information Technology 0.3% -80% -0.3%

CGG France Energy 0.3% -70% -0.3%

▪ Our holding in cash provided some cushioning over the period, however leverage had a negative

impact

Source: Willis Towers Watson, Factset, data as of 31 March 2020

Estimated attribution metrics calculated using the Brinson methodology using monthly data


30

Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes

of illustration only. Past performance is not a reliable indicator of future returns.

S T O C K L E V E L A T T R I B U T I O N 2 0 1 9

Source: Willis Towers Watson, Factset, data as of 31 December 2019

Estimated attribution metrics calculated using the Brinson methodology using monthly data


We aim to control for sector, country and style biases to ensure that portfolio risk and

performance is driven by our Stock Pickers stock selection. Our portfolio has an active share of

80%, with a Tracking Error of 2-4% p.a.

Name Country Sector

Active

Average

Weight

Annualised Total

Return in Sterling

Attribution

Effect

(Annualised)

TOP 5 CONTRIBUTORS

Qorvo, Inc. United States Information Technology 0.4% 84% 0.5%

New Oriental Education & Technology Group, China Consumer Discretionary 0.7% 113% 0.5%

Charter Communications, United States Communication Services 1.0% 64% 0.3%

Crown Holdings, Inc. United States Materials 0.9% 68% 0.3%

CGG France Energy 0.4% 136% 0.3%

TOP 5 DETRACTORS

Apple Inc. United States Information Technology -2.1% 81% -0.9%

Qurate Retail, Inc United States Consumer Discretionary 0.5% -58% -0.6%

Glanbia Plc United Kingdom Consumer Staples 0.5% -40% -0.4%

Baidu, Inc. China Communication Services 0.7% -23% -0.4%

Pearson PLC United Kingdom Communication Services 0.6% -31% -0.3%

31

C O S T S R E M A I N C O M P E T I T I V E

▪ Administrative expenses reduced to £5.9m from £6.5m in 2018, including reduction in Directors’

remuneration

▪ Ongoing Charges Ratio reduced to 0.64% in 2019 from 0.65% in 2018; KID charges (below) are competitive

0

0.5

1

1.5

2

2.5

3

3.5

4

(%)

Performance Fees Portfolio transaction costs Ongoing costs

The charges are shown for the AIC global equity sector investment companies. Data sourced by WTW from the latest investment company Key Information Documents (KIDs). As such cost

data may be as at different dates.


THANK YOU

I M P O R T A N T I N F O R M A T I O N A N D R I S K W A R N I N G S

33

This section contains important regulatory disclosures and risk warnings that are relevant to the material in this document. You should read this

section carefully, as it is intended to inform and protect you.

• The value of all investments and the income from them can go down as well as up. This means you could get back less than you invested.

• Past performance is not a reliable indicator of future returns.

• Alliance Trust may borrow to finance further investment (gearing). The use of gearing is likely to lead to volatility in the Net Asset Value

(NAV) meaning that a relatively small movement, down or up, in the value of the Trust’s assets will result in a magnified movement, in the

same direction, of that NAV. This may mean that you could get back nothing at all.

• The Trust has underlying holdings which are denominated in currencies other than Sterling and therefore may be affected by movements in

exchange rates. Consequently, the value of these investments may rise or fall in line with exchange rates.

Calendar year performance 2015 2016 2017 2018 2019

Alliance Trust Equity Portfolio Return (%)1 6.1 23.3 17.9 -4.2 22.9

MSCI ACWI Total Return (%) 3.8 29.4 13.8 -3.3 21.7

Relative return (%) +2.3 -6.1 +4.1 -0.9 +1.2

Source: Willis Towers Watson, December 2019. 1Calculated before managers' fees and including the effect of the managers' cash holdings. In order to report the long-term record of the

equity portfolio, the returns of the portfolio prior to its restructure early in April 2017 have been combined with the returns to date of the current portfolio. MSCI ACWI Gross Dividends

Reinvested Total Return reported for the period 2015 to 2018 and MSCI ACWI Net Dividends Reinvested Total Return reported for 2019. Equity portfolio returns are as reported in the

Company’s December factsheets except for 2019 where the one-year performance was not disclosed.



I M P O R T A N T I N F O R M A T I O N

34

• This financial promotion has been approved by Towers Watson Investment Management Limited (“TWIM"), authorised and regulated by the

Financial Conduct Authority. This presentation includes certain information and materials prepared for Alliance Trust PLC (the “Company”) by

TWIM. Unless stated specifically otherwise, this presentation is not a recommendation, offer or solicitation to buy or sell and any prices or

quotations contained herein are for information purposes only.

• This presentation has been prepared for general information purposes only and must not be relied upon in connection with any investment

decision. Under no circumstances should this presentation or any of the information contained within it be considered a substitute for specific

professional advice. Potential investors should seek independent financial advice from a financial adviser who is authorised under the Financial

Services and Markets Act 2000 before making any investment decision.

• This document contains certain forward‐looking statements with respect to the financial condition, results of operations and businesses and plans

of the Company and its subsidiaries (the “Group”). These statements and forecasts involve risk and uncertainty because they relate to events and

depend upon circumstances that have not yet occurred. There are a number of factors that could cause actual results or developments to differ

materially from those expressed or implied by these forward‐looking statements and forecasts. As a result, the Group’s actual future financial

condition, results of operations and business and plans may differ materially from the plans, goals and expectations expressed or implied by

these forward‐looking statements. The Company undertakes no obligation publicly to update or revise forward‐looking statements, except as may

be required by applicable law and regulation (including the Listing Rules of the Financial Conduct Authority). Nothing in this presentation should

be construed as a profit forecast or be relied upon as a guide to future performance.

• The presentation is based on information available to TWIM at the date of this material and takes no account of subsequent developments after

that date. In preparing this material TWIM has relied upon data supplied to it by third parties. Whilst reasonable care has been taken to gauge the

reliability of this data, TWIM provides no guarantee as to the accuracy or completeness of this data and TWIM and its affiliates and their

respective directors, officers and employees accept no responsibility and will not be liable for any errors or misrepresentations in the data made

by any third party.

• The entities within the Willis Towers Watson group responsible for the management of the Alliance Trust investment portfolio are Towers Watson

Investment Management (Ireland) Limited (TWIMI), Willis Towers Watson House, Elm Park, Merrion Road, Dublin, DO4 P231, register number

528835, authorised and regulated by the Central Bank of Ireland as the Alternative Investment Fund Mangers (AIFM), and Towers Watson

Investment Management Limited (TWIM), authorised and regulated by the Financial Conduct Authority (reference number 446740) as the

investment manager and a delegate of the AIFM.


• In the absence of its express written agreement to the contrary neither the Company nor TWIM and its affiliates and their respective directors,

officers and employees accept any responsibility and will not be liable for any consequences howsoever arising from any use of or reliance on

this presentation.

• NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA,

JAPAN OR SOUTH AFRICA OR ANY JURISDICTION FOR WHICH THE SAME COULD BE UNLAWFUL. THE INFORMATION CONTAINED

HEREIN DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION, INCLUDING IN THE UNITED STATES,

CANADA, AUSTRALIA, JAPAN OR SOUTH AFRICA

• Whilst care has been taken in compiling the content of this presentation, no representation or warranty, express or implied, is made by Alliance

Trust as to its accuracy or completeness. Some slides may been compiled from external sources. Whilst these sources are believed to be

reliable, the information has not been independently verified and therefore no representation is made as to its accuracy or completeness.

• The opinions expressed are those held by Alliance Trust at date of issue and are subject to change. Examples used are to demonstrate our

investment philosophy and should not be interpreted as recommendations to buy or sell.

• Alliance Trust PLC is listed on the London Stock Exchange and is registered in Scotland No SC1731. Registered office, River Court, 5 West

Victoria Dock Road, Dundee, DD1 3JT. Alliance Trust PLC gives no financial or investment advice.

• The MSCI information is the exclusive property of MSCI Inc. (“MSCI”) and may not be reproduced or re-disseminated in any form or used to

create any financial products or indices without MSCI’s express prior written permission. This information is provided “as is” without any express

or implied warranties. In no event shall MSCI or any of its affiliates or information providers have any liability of any kind to any person or entity

arising from or related to this information. For the avoidance of doubt, please also note that TWIM and its affiliates and their respective directors,

officers and employees accepts no responsibility and will not be liable for any errors or misrepresentations in any MSCI information made

available hereunder.

I M P O R T A N T I N F O R M A T I O N


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