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Witan Investment Trust plc 2011 Annual General Meeting 10 May 2011.

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Presentation on theme: "Witan Investment Trust plc 2011 Annual General Meeting 10 May 2011."— Presentation transcript:

1 Witan Investment Trust plc 2011 Annual General Meeting 10 May 2011

2 2 Disclaimer These slides are intended to highlight some features from Witans 2010 results, for the use of shareholders, analysts and other professional investors. This material is for informational purposes only and does not constitute a solicitation or a personal recommendation in any jurisdiction. Any reference to individual securities does not constitute a recommendation to purchase, sell or hold the investment. No reliance may be placed for any purpose on the information and opinions contained in this document or their accuracy or completeness. No part of this material may be copied, photocopied or duplicated in any form or distributed to any person that is not an employee, officer, director or authorised agent of the recipient, without Witan Investment Services Limited's prior permission. Please remember that past performance is not a guide to future performance. Witan Investment Trust is an equity investment. The value of an investment and the income from it can fall as well as rise as a result of currency and market fluctuations and you may not get back the amount originally invested. Issued and approved by Witan Investment Services Limited. Witan Investment Services Limited is registered in England no. 5272533 of 14 Queen Annes Gate, London SW1H 9AA. The VAT registration number for Witan Investment Services Limited is 863 5738 89. Witan Investment Services Limited provides investment products and services and is authorised and regulated by the Financial Services Authority.

3 3 2009: A positive year for Witan The Chairman, Harry Henderson The CEO, Andrew Bell Glossary of Terms Annual General Meeting: Agenda

4 Witan Investment Trust plc Harry Henderson Chairman

5 5 Topics to cover Performance in 2010 Changes in portfolio management Disciplined attitude to costs The longer term picture Investment outlook

6 6 2009: A positive year for Witan Strong absolute total return of 18.9%* Outperformance of 3.4% over benchmark return of 15.5%* Portfolio redirected along fully active lines Active use of gearing 36 th annual increase in the dividend* (n.b. Dividend growth should be viewed in the context of total investment return – see slides 13,14) Good performance relative to peer group 2010: A strong year for Witan *Please remember that past performance is not a guide to future performance. Witan Investment Trust is an equity investment. The value of an investment and the income from it can fall as well as rise as a result of currency and market fluctuations and you may not get back the amount originally invested. Please also see disclaimer on page 2.

7 7 2009: A positive year for Witan TER increased from 0.99% to 1.07% Excluding performance fees, increase was from 0.72% to 0.81% Owing to: New savings plan administrator Increased fees from active managers replacing index funds Handover period for Executive Team changes Advisers/legal fees re manager changes Our approach: determination to minimise unproductive costs and to gain value where costs are necessarily incurred Costs rose in 2010

8 8 The longer term performance picture Multi manager strategy adopted in September 2004 Since then: Witan NAV total return to end 2010: 87.2%* A compound return of 10.0% p.a.* Benchmark total return to end 2010: 72.6%* A compound return of 9.1%* (See also total investment returns shown on slides 13,14) *Please remember that past performance is not a guide to future performance. Witan Investment Trust is an equity investment. The value of an investment and the income from it can fall as well as rise as a result of currency and market fluctuations and you may not get back the amount originally invested. Please also see disclaimer on page 2.

9 9 Reasons for cautious optimism Global growth continuing – double dip avoided Profits and now dividends recovering Interest rates remain low to promote recovery Relative and absolute valuations for equities are competitive Tempered by: Middle East unrest, inflation rising, Japanese worries, European sovereign debt problems

10 Witan Investment Trust plc Andrew Bell Chief Executive Officer

11 11 Witans objectives To be the preferred choice for wealth creation via equity investment Provide a multi manager approach providing diversified exposure to global growth Make money for shareholders, beat the peer group and outperform equity index comparators Real dividend growth

12 12 Highlights of 2010 NAV total return 18.9%, 3.4% points ahead of benchmark* 5 year NAVTR 38.1%, 6.7% p.a., 6.5% points ahead of benchmark* Shift to 100% active management More active portfolio management (stock picking, gearing, asset allocation) 36 th consecutive year of dividend growth* (n.b. Dividend growth should be viewed in the context of total investment return – see slides 13,14) *Please remember that past performance is not a guide to future performance. Witan Investment Trust is an equity investment. The value of an investment and the income from it can fall as well as rise as a result of currency and market fluctuations and you may not get back the amount originally invested. Please also see disclaimer on page 2.

13 13 Performance in the 5 years to 31 st December 2010 All figures are total return (£) for the31.12.0631.12.0731.12.0831.12.0931.12.10 discrete year ending on the date shown% % % % % Share Price +12.1+7.5-24.9+30.6+18.9 Net Asset Value +10.7+7.3-23.3+25.9+18.9 Benchmark * +11.2+8.1-23.9+24.5+15.5 NAV total return relative to benchmark -0.5-0.8+0.6+1.4+3.4 Data Source: DataStream *Since 01.10.2007 the benchmark has been a composite of 40% FTSE All-Share/20% FTSE All-World North America/20% FTSE All-World Europe (ex UK) /20% FTSE All-World Asia Pacific. From 01.09.2004 to 30.09.2007 the benchmark comprised of 50% FTSE All-Share/50% FTSE World (ex UK)

14 14 Performance since 2004* *Please remember that past performance is not a guide to future performance. Witan Investment Trust is an equity investment. The value of an investment and the income from it can fall as well as rise as a result of currency and market fluctuations and you may not get back the amount originally invested. Please also see disclaimer on page 2. Key NAV = Net Asset Value NAV Rel = NAV excluding dividends relative to Witans Benchmark NAV TR Rel = NAV total return including dividends relative to Witans Benchmark Source: DataStream

15 15 Dividend growth - ahead of inflation* 2010 the 36 th successive year of increase; Since 1975 dividend x30, RPI x9.4* (n.b. Dividend growth should be viewed in the context of total investment return – see slides 13,14) Source: Witan to 31.12.2010. CPI rebased to 7.75p (Witans dividend in 2000) *Please remember that past performance is not a guide to future performance. Witan Investment Trust is an equity investment. The value of an investment and the income from it can fall as well as rise as a result of currency and market fluctuations and you may not get back the amount originally invested. Please also see disclaimer on page 2.

16 16 Discount and Buybacks Buybacks address one cause of discount volatility and help NAV Important to address causes of imbalances (performance, unclear investment policy) Aim for sustainable sub10% discount 4% repurchased in 2010 Source: DataStream

17 17 Main drivers of performance 2010Portfolio outperformed, gearing and buybacks also contributed* Previous headwinds were: Proportion in index-anchored portfolios; Low weighting in emerging/fast growth economies; Relatively inactive geographical allocation; Relatively inactive use of gearing; Lack of tactical responsiveness; Structure of gearing. *Please remember that past performance is not a guide to future performance. Witan Investment Trust is an equity investment. The value of an investment and the income from it can fall as well as rise as a result of currency and market fluctuations and you may not get back the amount originally invested. Please also see disclaimer on page 2.

18 18 Addressed headwinds during 2010 Proportion in index-type portfolios – 20.6% end 2009. Now nil Low weighting in emerging/fast growth economies – 11.3% end 2009, 16.9% Dec 2010. Specialist manager appointed Relatively inactive geographical allocation –differential cash raising and futures used to adjust exposure in 2010 Relatively inactive use of gearing – actively varied in H2 2010 Lack of tactical responsiveness – activated use of Futures; centrally managed Growth Opportunities Portfolio (e.g. private equity trusts) Structure of gearing –multi currency facility to give tactical headroom and ability to borrow in non-£ currency

19 19 Expense efficiency a priority 201020092008 TER1.07% 0.99%0.72% Performance Fees£2.8m (0.26%)£2.6m (0.27%)£1.4m (0.13%) Other Costs£6.2m £5.2m£5.0m Av. Shareholders Funds £1.08bn£950m £1.05bn One off saving scheme migration costs and legal costs in 2010 Corporate overheads carefully managed. No plc-level fee levied. External costs regularly reviewed to ensure value for money. Higher costs with outperformance preferred to low cost underperformance Even with the higher TER, Witan made strong gains and outperformed its benchmark by 3.4%.* *Please remember that past performance is not a guide to future performance. Witan Investment Trust is an equity investment. The value of an investment and the income from it can fall as well as rise as a result of currency and market fluctuations and you may not get back the amount originally invested. Please also see disclaimer on page 2.

20 20 Multi Manager Structure Set up in 2004, with 8 mandates, rose to 13 as passive % reduced As at end 2010: 4 Global unconstrained stock pickers 4 active UK (1 smaller company) 2 pan-European 1 Asia, 1 Global Emerging Markets Growth Opportunities (directly held funds) Benchmark 40% FTSE All Share, 20% each North America, Asia, Europe ex-UK

21 21 Manager changes in 2010 2010 changes: Wellington (Europe ex-UK) replaced by Marathon (pan- European) Henderson UK Enhanced Index closed, replaced by Lindsell Train and NewSmith (both active) Brandes Japanese and Henderson US Enhanced Index closed Veritas appointed with a global mandate c.6% allocated to directly-held growth opportunities (e.g. private equity trusts) Trilogy £50m emerging markets mandate December 2010

22 22 Witan Manager Structure ManagerMandate 31/12/09 (%) 31/12/10 (%) HendersonUK index +15.5- ArtemisUK8.08.3 Lindsell TrainUK-9.5 NewSmithUK-9.3 HendersonUK Smaller Cos3.12.5 MarathonEurope ex-UK [UK pre-July]7.311.2 WellingtonEurope ex-UK8.6- VarenneEurope ex-UK2.52.6 HendersonUS index +5.1- BrandesJapan5.7- ComgestPacific ex Jap6.06.6 OrbisAustralia1.7- TrilogyEmerging Markets-4.2 SoutheasternGlobal15.012.8 MFSGlobal12.09.7 Thomas WhiteGlobal9.510.0 VeritasGlobal-6.8 Global Opportunities PortfolioSpecialist-6.5 FuturesAssetAlloc/gearing-- Source: Witan 31/12/2009 & 31/12/2010

23 23 Witan Geographical Exposure Region Dec 2009 Dec 2010 Difference UK34.237.2 +3.0 North America23.117.7 -5.4 Europe21.919.4 -2.5 Japan 9.5 2.3 -7.2 Asia/Emerging11.316.9 +5.6 Growth Opps - 6.5 +6.5 Source: Witan 31/12/2009 & 31/12/2010

24 24 Summary: using existing levers Asset allocation – reduced Japan substantially, closed US index portfolio, added to UK/Europe mid year Manager selection – changed European, UK, global and emerging market mandates Gearing – more actively managed since Q2 Share buybacks – 4% repurchased 2010

25 25 Summary: new performance levers Stock picking vs. beta plays Active UK managers replaced Enhanced Index mandate; Veritas replaced US index and Japan mandates Exposure to structural economic shifts Raised emerging economy exposure. Appointed specialist manager Flexibility in borrowing facilities facility put in place Ability to adjust tactical exposure selective use of index futures to raise gearing via favoured markets Special situations and new asset categories Growth Opportunities portfolio – e.g. private equity trusts, property, distressed debt

26 26 Witan in future Diversified exposure to global equities Liquid: £1.1bn net assets Focused on adding value, growing investors wealth and income* Active management of risk appetite (both ways) through active managers and adjusting gearing Eyes on long term returns, finger on the short-term pulse *Please remember that past performance is not a guide to future performance. Witan Investment Trust is an equity investment. The value of an investment and the income from it can fall as well as rise as a result of currency and market fluctuations and you may not get back the amount originally invested. Please also see disclaimer on page 2.

27 27 Glossary TermDefinition Absolute ReturnThe actual growth rate, as opposed to relative (compared against) Active Management/Passive Management Active funds, are where the stocks are actively chosen by a fund manager. Passive funds mirror the constituents of an index and are therefore not actively chosen, but matched BetaA way to describe the movement of a share price or portfolio relative to the movement of an index Buy-backWhere shares have been bought back by the Trust to control the discount Compound ReturnThe annualised rate of growth DiscountThe difference between the NAV and the Share Price Distressed DebtAn investment that provides funding for companies who find it difficult to borrow FuturesA derivative investment that in this case is predicting the future movements of an equity index GearingThe ability to borrow against assets HeadwindA negative factor Index +Beating the index Index FundsPassive funds that look to replicate a stock market index LiquidEasy to transact in the shares of MandateThe remit for an investment manager NAV/NAV TRNet Asset Value, the TR indicates whether the income is included or not Outperformance/UnderperformanceWhether performance was better (out) or worse (under) Private EquityAn investment that provides funding for companies that are privately held (not quoted) Risk AppetiteThe level of risk an investor is prepared to take TERTotal expense ratio. A percentage used to measure cost UnconstrainedNot held back by restrictions such as which sector or region

28 28 Witan Investment Services 14 Queen Annes Gate, London SW1H 9AA Tel: 020 7227 9770 Fax: 020 7227 9771 This document may not be reproduced in any form without the express permission of Witan Investment Services Limited and to the extent that it is passed on care must be taken to ensure that this reproduction is in a form which accurately reflects the information presented here. Whilst Witan Investment Services Limited believe that the information is correct at the date of production, no representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions in this document by any of Witan Investment Services Limited or their respective directors and no responsibility or liability is accepted by such persons for the accuracy or completeness of any such information or opinions or for any action taken on the basis of the contents of this document. No reliance may be placed for any purpose on the information and opinions contained in this document or their accuracy or completeness. This document has been produced based on Witan Investment Services research and analysis and represents our house view. The information is made available to clients only incidentally. Unless otherwise indicated, the source for all data is Witan Investment Services. Any reference to individual companies is purely for the purpose of illustration and should not be construed as a recommendation to buy or sell or advice in relation to investment, legal or tax matters. Witan Investment Services (14 Queen Annes Gate, London SW1H 9AA) is authorised and regulated by the Financial Services Authority to provide investment products and services. We may record telephone calls for our mutual protection and to improve customer service. This document does not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase any investment, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract for the same. Please remember that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. Tax assumptions may change if the law changes and the value of tax relief will depend on individual circumstances.


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