“I would never fire a fund manager just because they lost our money”

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While Alliance Trust’s heritage dates back to 1888, it is perhaps best known for reinventing itself in April 2017 when it appointed investment advisor Willis Towers Watson to manage its assets through a “multi-manager” approach.

Over the past five years, the share price of the £2.9bn investment trust has risen 49 per cent, compared to a 23 per cent gain by Witan, its closest rival. The past year has been challenging, however, with confidence losing 4 percent, albeit less than Witan’s 8 percent drop.

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While Alliance Trust prides itself on being “style neutral” by bringing together nine fund managers who take fundamentally different approaches, Craig Baker, global chief investment officer at WTW, explains that when global equities fall, so does the portfolio. Despite a rough year, he says he is “genuinely excited” about how the trust is positioned.

Rather than fire a fund manager who is disappointed, he says the team will replenish their investment when they understand why performance is lagging.

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How do you invest?

It’s a “multi-manager” approach, meaning we choose fund managers who we believe are the best stock pickers from around the world. Alliance Trust does not have the drawbacks typically associated with multi-manager funds. One of the most common is having too many stocks, making it difficult to generate returns. It can also get expensive because you have two tiers of fees: the underlying management fees plus another fee for managing the portfolio as a whole.

We get around both problems because we ask the underlying managers to only give us their best ideas on 10 to 20 stocks, while WTW has the scale to drive costs down.

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We provide access to some of the best fund managers that are often unavailable to do-it-yourselfers – and we can do this at a low cost. You’re not dependent on any individual or specific investment process or style, so you don’t have the drawbacks that sometimes come with that approach.

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