They have each been allocated approximately £100m (c. 5% of Witan's assets) to manage in European equities, with the objective of outperforming the FTSE Europe ex-UK regional index as a benchmark.
The portfolios have been funded by the termination of the pan-European equity mandate previously managed by Marathon Asset Management, with the addition of some £24m from cash resources. The change was implemented during late October using a transition manager.
Following this change, Witan will have ten external managers (covering UK, European, Asian, Emerging Market and Global markets), all of whom adopt a high conviction active management approach. In addition the Company's Executive team invests up to 10% of the assets in a range of collective funds covering specialist asset classes and actively adjusts the Company's gearing according to the degree of opportunity that the markets are perceived to offer.
Witan's CEO, Andrew Bell commented,
“The reason for the new appointments is to increase our actively managed exposure to European equities, for which the political and economic backdrop has improved during 2017. We took a more positive view on the region in April, ahead of the French Presidential election, using equity index futures to increase our exposure while we conducted a search amongst available high-conviction active managers, in order to increase the stock-specific focus of our portfolio and its potential to outperform.
As well as increasing Witan's exposure to a region with improving economic fundamentals and many well-managed international Companies, this change marks a further step towards increasing the stock-specific conviction in our combined portfolio. One, albeit imperfect, measure of this is Active Share – the degree to which a portfolio differs from its benchmark (with 0% being a replica of the index and 100% having no holdings in common). The appointment of Crux and SW Mitchell, with concentrated portfolios, will significantly increase the active share of our European manager portfolios (from around 70% to 86%), with Witan's overall combined active share rising to over 76% (from c 74% in June).
We would like to thank Marathon Asset Management for their stewardship on behalf of our shareholders since 2007 (2010 in European equities). During what has been a challenging and volatile period, both for Europe and the UK, they have successfully added value against the index, for which, on behalf of shareholders, we thank them.”