Performance Highlights
- The Company’s Total Shareholder Return1 (TSR) was -5.8%; its Net Asset Value (NAV) Total Return1 was -7.1%.
- Both the TSR1 and NAV Total Return1 were ahead of our benchmark, the MSCI ACWI, which returned -8.1%.
- We also outperformed most peers in the Association of Investment Companies (‘AIC’) Global Sector where the average TSR1 was -23.2%.
- Performance benefitted from the portfolio’s balanced style exposures, avoiding the worst of growth stock declines.
- Total dividend of 24.0p per ordinary share declared for the year ended 31 December 2022, a 26% increase on 2021.
- The Company expects to extend its 56-year track record of increasing dividends.
CHAIRMAN’S STATEMENT: “We are pleased that our performance was more resilient than the market and ahead of most of our peers in the AIC Global Sector.” VOLATILE MARKET BACKDROP: There were few places for investors to hide in 2022. The return of high inflation after a 40-year absence, the war in Ukraine, higher interest rates and fears of recession, sent most asset prices tumbling. Equities suffered less than bonds but still ended the year down on the previous year. Against this challenging backdrop, the Company delivered an encouraging performance against its benchmark index, the MSCI All Country World Index (MSCI ACWI) and outperformed most of its competitors in the Association of Investment Companies (AIC) Global Sector. In its report, our Investment Manager, Willis Towers Watson (‘WTW’) analyses this performance. While any negative annual return is frustrating, we remain focused on long-term performance and are encouraged by last year’s progress relative to competitors and the index. RESILIENT PERFORMANCE: In the year to 31 December 2022, the Company’s Net Asset Value (NAV) Total Return was -7.1 % (2021: 18.6%), outperforming our benchmark index, the MSCI ACWI which returned -8.1% (2021: 19.6%). The Company’s Total Shareholder Return (TSR) was -5.8% (2021: 16.5%), as the discount to NAV at which the shares traded narrowed. The average TSR of the AIC Global Sector peer group was -23.2%.Our portfolio’s longer term returns also compare well with our peers. Between 1 April 2017, when we adopted our multi-manager strategy, and 31 December 2022, the Company’s TSR was 54.7% against the average share price return of the AIC Global Sector peer group of 41.2%. We estimate that anyone investing £100 in April 2017 will have seen the value of their investment grow to £155 if they had reinvested their dividends.The Board is satisfied that the Company’s long-term performance has been consistent with its objective of delivering real returns and a rising dividend. It is also pleased with the performance versus peers. The only disappointment is that the Company has not yet outperformed its benchmark index by the target set when the investment strategy was adopted on 1 April 2017.As part of its annual review of the performance of the Investment Manager, the Board also considered WTW’s performance over the first five-year period since its appointment. The main findings of the review reinforced the Board’s judgement that the investment strategy is sound, and the Board continues to endorse WTW’s investment approach. INCREASED DIVIDEND: The Board has declared a fourth interim dividend of 6.0p per share which brings the full year dividend to 24.0p. Following the step up in dividend levels from the second half of 2021, this is a 26% increase on the prior year and the 56th consecutive annual increase in the ordinary dividend. With a share price of 948.0p at year end, the full year dividend represents a yield of 2.5%. Following a year of particularly high income from certain stocks in the portfolio, I am pleased to report that Earnings Per Share (‘EPS’) for the year ended 31 December is 26.14p per share (2021: 15.48p). Given this high level of earnings in 2022, the Board has taken the opportunity to take advantage of the Company’s structure as an investment trust and add to the Company’s already significant distributable reserves.BORROWING AND GEARINGThere were no major changes to the Company’s long-term borrowing arrangements during 2022. As market interest rates rose, the value of the fixed rate loans on the Company’s balance sheet declined resulting in a higher NAV, thus enhancing overall performance for the year. STABLE DISCOUNT: shareholders are aware, one of the Board’s strategic objectives is the maintenance of a stable discount. The Company’s average discount over the year was 5.9%, equal to that of the prior year. As at 31 December 2022 the Company’s discount was 4.2% (2021: 5.3%). This compared favourably with the average discount for the AIC Global Sector of 7.4% as at the year end. During the year under review, the Company bought back 15.5 million shares. These share buybacks helped to support the stability of the discount and enhanced the NAV Total Return by 0.3%. The Board will continue to use share buybacks as appropriate, and invest in promotional activity, such as investor events, designed to raise the Company’s profile, to support the management of the discount. We hope, in time, to convert our discount into a premium as the benefits of our long-term strategy gain wider recognition. STRENGTHENED OPERATING MODELS: previously announced, we made some operational changes at the end of 2022 which were the outcome of the work undertaken by the Board to strengthen the Company’s operating model. Juniper Partners Limited (‘Juniper’) has been appointed as Company Secretary and will also provide finance, fund administration and accounting services to the Company from 1 April 2023. WTW was also appointed to provide further marketing, public relations, and investor relations services. The changes will benefit shareholders by reducing risk in the Company’s operating model and should also enhance the Company’s communications. The Board is pleased that despite the changes, it has been able to continue to work with members of the Company’s Executive team in their new roles with either Juniper or WTW.BOARD SUCCESSIONAs part of our succession planning, we have made a number of changes to the Board over the past three years. The most recent of these being the appointment of Vicky Hastings and Milyae Park to the Board in September 2022. Vicky has extensive experience in fund management, both as a fund manager and business leader, while Milyae’s diverse career spans financial services, retail, and technology. They have brought further diversity of skills and fresh perspectives to the Board.I would like to express my thanks to Anthony Brooke for his significant contribution to the Board over the past seven and a half years. Anthony joined the Board in 2015 and will complete his tenure at the Annual General Meeting on 27 April 2023. PORTFOLIO WELL POSITIONED FOR UNCERTAIN ECONOMIC OUTLOOK: The outlook for the global economy remains highly uncertain and equity markets remain volatile. If inflation and interest rates have peaked in the US and the UK, as some analysts believe, and the war in Ukraine comes to an end, equity markets may rally. On the other hand, they may fall further if we descend into a deep recession. Coherent arguments can be made for both a bull and a bear case. The good news is that the success of our investment strategy does not hinge on macroeconomic outcomes. Regardless of the immediate outlook, our Stock Pickers remain resolutely focused on finding excellent businesses with exciting prospects. The speculative froth topping the valuations of many growth stocks has been blown away by higher interest rates and harsher economic conditions. We now look forward to the possibility of company fundamentals, not sentiment, driving share prices, if not for the short term, certainly in the long run.Gregor Stewart Chairman 8 March 2023 |
About Alliance Trust PLC
Alliance Trust aims to deliver long-term capital growth and rising income from investing in global equities at a competitive cost. We blend the top stock selections of some of the world’s best active managers, as rated by Willis Towers Watson, into a single diversified portfolio designed to outperform the market while carefully managing risk and volatility. Alliance Trust is an AIC Dividend Hero with 56 consecutive years of rising dividends.
https://www.alliancetrust.co.uk
| For more information, please contact: | ||
| Mark Atkinson Senior Director Client Management, Wealth & Retail | Sarah Gibbons-Cook | |
| Willis Towers Watson | Quill PR | |
| Tel: 07918 724303 | Tel: 020 7466 5050 | |
| Mark.Atkinson@wtwco.com | AllianceTrust@quillpr.com |
1 Alternative Performance Measure. Total Shareholder Return (TSR) is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend. Net Asset Value (NAV) Total Return is a measure of the performance of the Company’s Net Asset Value (NAV) over a specified time period. It combines any change in the NAV and dividends paid.
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