Update on New Approach to Investment Management • Details of the Equity Managers • General Meeting to be held on 28 February 2017 On 15 December 2016, the Board of Alliance Trust set out a proposed new approach to managing the Trust’s equity portfolio, with the aim of increasing the likelihood of consistently delivering the performance target and maintaining its dividend track record. The Trust's objective will remain to generate a real return for shareholders over the long-term by a combination of capital growth and a rising dividend. The Board is proposing that Willis Towers Watson (WTW), a leading investment group, will become the investment manager 1 , working with eight 2 equity managers, each of whom is rated best-in-class 3 by WTW. Each manager will typically select 20 stocks, which will make up the combined portfolio of the Trust. This distinctive approach means that every stock selected is one in which the equity managers have their highest conviction i.e. those investments they believe are most likely to deliver positive absolute and relative returns. WTW will maintain overall oversight of the combined portfolio, including income, risk and concentration characteristics. Craig Baker, CIO of WTW, will lead a highly experienced team responsible for the combined portfolio, with David Shapiro and Mark Davis as co-portfolio managers and Stuart Gray as the lead researcher. WTW has a long track-record of successfully managing multi-manager portfolios, and in particular has extensive experience of working with managers to create concentrated portfolios. In light of the Board’s confidence in the new approach, the target for the equity portfolio to outperform the existing benchmark, the MSCI All Country World Index, will be doubled from 1% to 2% p.a., net of costs, over rolling three-year periods. Alongside this enhanced target, the Board reaffirms its commitment to the existing progressive dividend policy. This aims to generate a growing revenue stream from the portfolio, which will allow the Trust to continue its 49-year track-record of increasing dividends year-on-year. Further, by leveraging the scale of Alliance Trust and WTW, total annual costs will be targeted to be below 60bps 4 ; a highly competitive rate for an investment trust offering access to such best-in-class 3 managers and targeting this level of outperformance. Selection of Equity Managers Alliance Trust is today announcing the names of the eight equity managers selected by WTW. Equity Manager Lead Individuals Location Black Creek Investment Management Bill Kanko Toronto First Pacific Advisors Pierre Py and Greg Herr Los Angeles GQG Partners Rajiv Jain Fort Lauderdale Jupiter Asset Management Limited Ben Whitmore London Lyrical Asset Management Andrew Wellington New York River and Mercantile Asset Management Hugh Sergeant London Sustainable Growth Advisers George Fraise, Gordon Marchand and Rob Rohn Stamford Veritas Asset Management Andy Headley London 1 Towers Watson Investment Management (Ireland) Limited to be appointed as Alternative Investment Fund Manager 2 Initial number of managers selected 3 As rated by Willis Towers Watson 4 At current size
Transcript
Update on New Approach to Investment Management
• Details of the Equity Managers • General Meeting to be held on 28 February 2017
On 15 December 2016, the Board of Alliance Trust set out a proposed new approach to managing the Trust’s equity portfolio, with the aim of increasing the likelihood of consistently delivering the performance target and maintaining its dividend track record. The Trust's objective will remain to generate a real return for shareholders over the long-term by a combination of capital growth and a rising dividend. The Board is proposing that Willis Towers Watson (WTW), a leading investment group, will become the investment manager1, working with eight2 equity managers, each of whom is rated best-in-class3 by WTW. Each manager will typically select 20 stocks, which will make up the combined portfolio of the Trust. This distinctive approach means that every stock selected is one in which the equity managers have their highest conviction i.e. those investments they believe are most likely to deliver positive absolute and relative returns. WTW will maintain overall oversight of the combined portfolio, including income, risk and concentration characteristics. Craig Baker, CIO of WTW, will lead a highly experienced team responsible for the combined portfolio, with David Shapiro and Mark Davis as co-portfolio managers and Stuart Gray as the lead researcher. WTW has a long track-record of successfully managing multi-manager portfolios, and in particular has extensive experience of working with managers to create concentrated portfolios. In light of the Board’s confidence in the new approach, the target for the equity portfolio to outperform the existing benchmark, the MSCI All Country World Index, will be doubled from 1% to 2% p.a., net of costs, over rolling three-year periods. Alongside this enhanced target, the Board reaffirms its commitment to the existing progressive dividend policy. This aims to generate a growing revenue stream from the portfolio, which will allow the Trust to continue its 49-year track-record of increasing dividends year-on-year. Further, by leveraging the scale of Alliance Trust and WTW, total annual costs will be targeted to be below 60bps4; a highly competitive rate for an investment trust offering access to such best-in-class3 managers and targeting this level of outperformance. Selection of Equity Managers Alliance Trust is today announcing the names of the eight equity managers selected by WTW. Equity Manager Lead Individuals Location Black Creek Investment Management Bill Kanko Toronto First Pacific Advisors Pierre Py and Greg Herr Los Angeles GQG Partners Rajiv Jain Fort Lauderdale Jupiter Asset Management Limited Ben Whitmore London Lyrical Asset Management Andrew Wellington New York River and Mercantile Asset Management
Hugh Sergeant London
Sustainable Growth Advisers George Fraise, Gordon Marchand and Rob Rohn
Stamford
Veritas Asset Management Andy Headley London
1 Towers Watson Investment Management (Ireland) Limited to be appointed as Alternative Investment Fund Manager 2 Initial number of managers selected 3 As rated by Willis Towers Watson 4 At current size
In selecting equity managers, WTW studies a number of criteria to assess the competitive advantage of each manager and whether that advantage is likely to be sustained. These many criteria include: the calibre of the key people; stability of the team; the depth of fundamental analysis involved in investment decisions; and, specifically for Alliance Trust, evidence of skill in managing concentrated mandates. Out of a universe of 2,800 equity managers and 16,500 products that WTW have access to information on, they have conducted formal research on 3,700 products, with only around 40 ‘global equity’ products receiving their highest rating. WTW believes that these eight managers, which all received the highest rating, together will create a highly compelling equity portfolio where long term returns relative to benchmark will be primarily driven by stock selection rather than macroeconomic factors. Lord Smith of Kelvin, Chairman of Alliance Trust, said: “Alliance Trust has provided investors with attractive returns and income through many generations. Our ambition is to ensure that it continues to do so, thereby remaining a core holding. Under the new approach, Alliance Trust will offer access to best-in-class managers, which, together with a focus only on their best investment ideas, will help to increase the likelihood of consistently delivering improved performance over the long-term. We are confident that this new approach, and the managers selected, will meet our ambition and deliver for many more generations to come and we recommend shareholders vote in favour at the General Meeting.” Further Detail on the Equity Managers and Lead Individuals Black Creek Investment Management (Black Creek) - Toronto, Canada (www.bcim.ca) Bill Kanko is founder and President of Black Creek, with 35 years’ experience in the industry. Prior to founding Black Creek in 2004, Bill was the lead manager for the AIM Trimark Fund and Trimark Select Growth Fund, which had outstanding performance during his leadership from 1999 to 2004. Bill is a long-term investor, looking for companies that are growing, are leaders in their markets and gaining market share. These companies tend to benefit from huge barriers to entry and sustainable competitive advantages. In Morningstar’s Canadian database, the Black Creek Global Leaders Fund ranks in the top 2% of funds in the global equity category over a five-year period and the top 3% over a ten-year period. First Pacific Advisors, LLC (FPA) - Los Angeles, USA (www.fpafunds.com) Pierre Py and Greg Herr, who have an average 20 years’ experience in the industry, have worked together at FPA since 2011. Pierre, Managing Director, previously worked at Harris Associates, Salomon Brothers, and Goldman Sachs. Pierre and Greg typically employ a long-term value investment approach, investing in companies that they believe have sustainable business models, exhibit financial strength, are run by operationally strong managers and whose stocks trade at a significant discount to the FPA team's estimate of intrinsic value. For Alliance Trust the team will look to balance this discount with the businesses’ ability to produce an attractive and sustainable dividend yield. A number of FPA's funds have been recognised for their performance by organisations including Morningstar and Lipper. GQG Partners, LLC (GQG) - Fort Lauderdale, USA (www.gqgpartners.com) Rajiv Jain is the Chairman and Chief Investment Officer of GQG and serves as the sole portfolio manager for each of the firm’s strategies. With 20 years of emerging markets experience, Rajiv is among the longest tenured investors in global and emerging markets equities. He launched GQG in June 2016, having previously worked at Vontobel Asset Management for 22 years; as co-CEO (from July 2014) and Chief Investment Officer and Head of Equities (from February 2002). He was named Morningstar International Fund Manager of the Year in 2012.
Rajiv looks for high-quality and sustainable businesses through a fundamental investment process utilising both traditional and non-traditional sources of information. Ideally, these quality businesses have enduring underlying strengths, which manifest in a variety of economic environments. The result has been portfolios designed to provide capital protection in down markets and attractive returns to long-term investors over a full market cycle. GQG will manage a global portfolio for the Trust with particular focus on emerging market companies. Jupiter Asset Management Limited (Jupiter) - London, UK (www.jupiteram.com) Ben Whitmore, who has 20 years’ experience in asset management, joined Jupiter in 2006 from Schroders. Ben will be supported by Dermot Murphy, who has worked at Jupiter since 2014. Ben is well known as a long-standing practitioner of contrarian value investing, investing in companies he considers to be out-of-favour and under-valued. This approach has proved successful with the Jupiter UK Special Situations Fund being top quartile in its sector over 1, 3, 5, and 10 years. Lyrical Asset Management (Lyrical) - New York, USA (www.lyricalam.com) Andrew Wellington serves as the firm’s Chief Investment Officer and Managing Partner, and has been involved with active portfolio management for over twenty years, with the last eight at Lyrical. He previously worked at Neuberger Berman where he became the sole portfolio manager for the institutional US mid-cap value product, more than tripling AUM. Andrew will be supported by Caroline Ritter. Value matters most to Lyrical and the team also maintains a strict discipline of investing in quality companies that they believe are relatively easy to analyse. They believe the combination of value, quality, and straightforward business model creates resiliency in the portfolio and the greatest likelihood of long-term absolute performance and outperformance. In April 2015 Lyrical received the Long Biased Equity Fund – Long Term Performance award at the annual 2015 Investors Choice Awards. River and Mercantile Asset Management (River and Mercantile) - London, UK (www.riverandmercantile.com/river_and_mercantile_asset_management/equity_funds) Hugh Sergeant is the Chief Investment Officer of Equities at River and Mercantile and was one of the founding Partners in 2006. He has over 30 years’ experience and was previously Head of UK Equities at Societe Generale Asset Management and prior to that at UBS/Phillips & Drew and Gartmore. The team invest in Recovery Equities, through an investment philosophy called PVT (Potential, Valuation & Timing) and a process that helps them identify value at different stages of a company’s lifecycle and to give signals from a timing perspective as to when that value might be unlocked. Hugh’s performance against his peer group has been strong and his UK and World Recovery portfolios are both ranked in the top decile of returns within their IA universe since inception. Sustainable Growth Advisers (SGA) - Stamford, USA (www.sgadvisers.com) George Fraise, Gordon Marchand and Rob Rohn founded SGA in 2003 and average over 30 years’ investment experience each, having also worked together before SGA. While the team shares a common approach to evaluating businesses and structuring portfolios, the personality attributes of the three portfolio managers are complementary in important ways. SGA focuses on building concentrated portfolios of unique, high quality global growth businesses that possess strong pricing power, offer recurring revenue generation and benefit from attractive, long runways of growth. SGA’s global growth equity portfolio had achieved a top decile in the Morningstar World Stock Category since inception, while their Global Mutual Fund was featured by Morningstar as one of five ‘Under-the-Radar’ and ‘Up-and-Coming Funds’ on 15 November 2016. Veritas Asset Management (Veritas) - London, UK (www.veritas-asset.com) Andrew Headley has over 20 years’ investment experience and is supported by co-portfolio manager Charles Richardson. They have worked together for almost 20 years including the last 13 years at Veritas, since founding the business in 2003.
Veritas focuses on active equity management, utilising its proprietary Real Return Approach since inception of the firm. Veritas employs an absolute mind-set when valuing companies and dispenses with any reference to indices when constructing the portfolio. Veritas describe the firm's overall approach as investing in a concentrated portfolio of good quality companies at the right price. The Veritas Global Focus Fund carries a Morningstar five-star gold rating. Dates of General Meeting and Shareholder Forums As previously announced, shareholders are being given the opportunity to vote on the new approach at a General Meeting, which will be held on 28 February 2017 at 14.30, at the Edinburgh International Conference Centre. In order to vote on the new investment approach, shareholders will be required to attend the General Meeting, or complete relevant proxy forms ahead of time. Documentation for the General Meeting will be posted in due course. Ahead of the General Meeting, the Board will host informal Shareholder Forums to provide shareholders with an opportunity to ask questions of a number of Alliance Trust’s Directors, and Craig Baker and David Shapiro of WTW, on the new investment approach. Details of the Shareholder Forums are as follows:
• London - 14.30, Wednesday 25 January – The Institution of Engineering and Technology, 2 Savoy Place, London, WC2R 0BL
• Dundee – 14.00, Friday 27 January - The Sidlaw Suite, West Park, 319 Perth Road, Dundee, DD2 1NN
• Edinburgh – 14.30, Monday 30 January – Edinburgh International Conference Centre, The Exchange, 150 Morrison Street, Edinburgh, EH3 8EE
A recording of a Shareholder forum is expected to be posted on the Alliance Trust PLC website (http://www.alliancetrust.co.uk/) once all three have concluded. Contact Details
For more information, please contact:
Lord Smith of Kelvin, Chairman Gregor Stewart, Deputy Chairman George Renouf, Director of Investor Relations Alliance Trust PLC T: 020 7353 4200 (on the 16 January 2017) T: 0131 322 3357 (thereafter)
Andrew 'Z' Zychowski Robbie Robertson David Yovichic Canaccord Genuity T: 020 7523 8000
Stephen Malthouse Martin Pengelley Tulchan Communications T: 020 7353 4200
Alliance Trust PLC is one of the largest generalist investment trusts by market value listed on the London Stock Exchange, having been founded in Dundee in 1888. As at the end of December 2016, Alliance Trust PLC had total assets of £3.3 billion.
Alliance Trust's focus is on investing in global equities for the long term to deliver enhanced returns for shareholders.
Alongside growth opportunities, income generation is a vital part of the investment process. As one of only four companies in the FTSE All-Share to have grown its dividend for 49 years, Alliance Trust's ambition is to continue to outperform in this area. www.alliancetrust.co.uk About Willis Towers Watson Investment Willis Towers Watson Investment is a leading investment business that is focused on creating financial value for investors through its expertise in risk assessment, strategic asset allocation, manager evaluation and investment management. It has over 900 investment associates worldwide, assets under advisory of around US$2.3 trillion and over US$87 billion of assets under management. It is part of Willis Towers Watson (NASDAQ: WLTW) which has over 39,000 employees in more than 120 territories and has roots dating to 1828. The business has worked, for many years, with equity managers to create tailored high-conviction portfolios for large institutional clients, with notable success over more than ten years for a large US charitable foundation. More recently it launched an open-ended, high-conviction multi-manager vehicle for institutional investors, the Global Equity Focus Fund, which has outperformed the MSCI World index by 2.7% per annum (3.9% cumulative) from inception on 17 August 2015 to the latest date available 11 January 2017, net of all underlying manager fees and fund expenses. These are provisional figures. www.willistowerswatson.com Important information
This announcement 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 announcement should be construed as a profit forecast or be relied upon as a guide to future performance.
The release, publication, transmission or distribution of this announcement in, into or from jurisdictions other than the United Kingdom may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published, transmitted or distributed should inform themselves about and observe such restrictions. In particular (but without limitation) this announcement is not for release, publication or distribution, directly or indirectly, to US persons, or into the United States, or into or from Canada or any other jurisdiction in which the same would be unlawful. Any failure to comply with the restrictions may constitute a violation of the securities laws of any such jurisdiction.
This financial promotion has been approved by Towers Watson Limited (Willis Towers Watson), authorised and regulated by the Financial Conduct Authority.
This presentation includes certain information and materials prepared for Alliance Trust plc by Willis Towers Watson.
This presentation has been prepared for general information purposes only and must not be relied upon in connection with any investment decision. Potential investors should seek independent financial advice from a financial advisor who is authorised under the Financial Services and Markets Act 2000 before making any investment decision.
The important information on pages 19 and 20 should be read in conjunction with this document.
2
Goals of the new approach
Consistent outperformance
At a competitive cost
Continuing the progressive dividend policy
‘Best of the best’
Equity Managers
Willis Towers Watson
3
The new investment structure
The Board & Executives
4
Why multi‐manager
More sustainable and robust structure
More consistent outperformance
Increased skills through specialism
Less reliance on any one manager/style
5
Why Willis Towers Watson
AccessSearch the world for the bestmanagers
RelationshipsPersuade managers to run ‘best ideas’ portfolios
ScaleBulk buying power to deliver cost savings
Track RecordStrong track record in selecting managers
Willis Towers Watson’s Global Equity Model Portfolio
6
Simulated performance is not a reliable indicator of future returns. Notes: Performance shown is the arithmetic difference between the cumulative return of the WTW Global Equity model portfolio (net of all fees) and the cumulative return of the MSCI World index, as at 30 September 2016. The WTW Global Equity model portfolio is a theoretical multi‐manager portfolio developed and managed by the WTW Manager Research team as if they were given delegated responsibility for client assets with no constraints. The model assumed an initial account size, benchmark (MSCI World), base currency (GBP) and cost of manager transitions. The manager research team constructs a portfolio of managers and then discusses any potential changes to the model portfolio and portfolio construction before officially proposing changes to be implemented from the start of the next quarter. Performance is sourced each quarter and a management fee for a typical WTW client is deducted to generate realistic net return numbers. The model’s aim is to demonstrate WTW’s skill in manager selection and portfolio construction. It replicates as accurately as possible how WTW would run a similar client mandate. However, the model cannot fully replicate the complexities of the real world. Please refer to the Disclaimer for important information regarding the model portfolios.
0%
10%
20%
30%
40%
50%
60%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Cumulative outperformance (net of fees) versus the MSCI World Index
7
‘Best of the best’
Access to best‐in‐class managers across the
world
Creating portfolios of ‘best ideas’
8
Helping managers deliver their best
Source: eVestment, as at 31 March 2016. Accurate as of 10 June 2016.The eVestment active global equity universe is made up of 977 products. 256 of these have outperformed the MSCI World ND (USD) over 5 years to end March 2016 and are included in this analysis. Active Share are averages over the 5 year period. Active share is the percentage of the portfolio different from the benchmark portfolio. Past performance is not a reliable indicator of future returns.
7%
21%
72%
Closet Indexers<60% Active Share
Active Managers60%‐80% Active Share
Highly Active Managers>80% Active Share
Only paying for true ‘active’ management
“British mutual‐fund fees are too high” – The Economist
“FCA clamps down on closet tracker funds” – Financial Times
“FCA challenges active managers to prove their worth” – Investment Week
“[With] closet indexing … you’re paying a manager a fortune and he has 85% of his assets invested parallel to indexes. If you have such a system, you’re
being played for a sucker.” – Charlie Munger, Berkshire Hathaway
9
‘Best of the best’ – the theory
10
*Likelihood represents probability of outperforming the benchmark over a 5‐year period.Source: Willis Towers Watson, December 2016Simulated performance is not a reliable indicator of future returns. Methodology: The Probability figures are calculated from the following simulation: A portfolio track record is created by sampling monthly returns from a normal distribution that has return and standard deviation as per the assumptions below. The portfolio simulation is repeated 100,000 times and the probability of outperforming the benchmark is calculated as the number of simulations in which the simulated alpha was greater than zero, divided by 100,000. The time period of the simulation is 5 years.The portfolio assumptions are as follows:Skilled managers have a gross information ratio of 0.4 (information ratio is outperformance of the benchmark / tracking error).Single skilled manager: outperformance net of 45bps OCR is 1.15%pa. Tracking error is 4% pa. Number of managers is 1.Eight high conviction skilled managers: the individual managers’ outperformance net of 60bps OCR is 2.6% pa. Tracking error is 8% pa. Correlation of the active positions is 0.1. Number of managers is 8.
8
11
‘Best of the best’ – the track record
Past performance is not a guide to future returns.
Notes: The TW Global Equity Focus Fund data sourced from BNY Mellon Fund Services (Ireland) Limited and MSCI World data from MSCI Inc, as at 11 January 2017. These are provisional figures.The TW Global Equity Focus Fund is an Irish AIF. Performance shown is for the USD Z Share Series, based on daily prices. The Z share series is net of all sub‐manager fees, gross of Willis Towers Watson fees and net of expenses. Inception date is 17 August 2015. The performance shown for the Advisory charitable foundation client is the equally weighted combination of all managers that Willis Towers Watson has proposed to the client that the client has hired, at various inception dates, to manage a concentrated portfolio. The performance data is net of manager fees and expenses and supplied by the foundation’s custodian, IFS State Street. MSCI All Country World Index data is supplied by MSCI Inc. Data is for the 5 years to 30 September 2016, the latest date with available data.
Performance vs MSCI World index since Fund’s inception on 17 August 2015 to 11 January 2017
Towers Watson Global Equity Focus Fund
+2.7%panet of manager fees
over longest available period
Advisory charitable foundation client
+3.3%panet of manager fees
over most recent 5 years available
Performance vs MSCI All Country World indexfrom 1 October 2011 to 30 September 2016
12
At a competitive cost
0.32
0.45
0.46
0.52
0.52
0.58
0.59
0.60
0.70
0.71
0.75
0.80
0.85
0.89
0.93 0.72
1.00
1.01
1.09
1.20
1.31
1.39
1.58 1.20
0.27
0.4
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
AIC Global sector Ongoing charge from latest Reports and Accounts (%pa)
Ongoing charge (ex performance fee) Performance fees
Target
Source: Company Accounts / CanaccordTarget assumes the Trust stays approximately at its current size.
The Willis Towers Watson team for Alliance Trust
Data as at 30September 2016
13
Portfolio ManagementTeam of 15
Portfolio ManagementTeam of 15
Research Team of 115Research
Team of 115
Craig BakerCraig Baker
David ShapiroDavid Shapiro Mark DavisMark DavisStuart GrayStuart Gray
SupportTeam of 120Support
Team of 120
CIO
14
The equity managers
Source: Willis Towers Watson and individual managers as of December 2016.
StyleManager
Ben is well known in the market as a long‐standing practitioner of contrarian value investing, he seeks businesses that are out‐of‐favour and under‐valued, but have prominent franchises and sound balance sheets.
Rajiv looks for high quality and sustainable businesses, whose underlying strength should outweigh its macro environment and where that company’s strength can only truly be understood through bottom‐up analysis.
Long‐term approach seeking companies that have high quality business models, exhibit financial strength, and strong management with a track record of shareholder alignment and allocating capital in a value‐accretive manner. The team operates a strict value discipline.
The process is to look 5‐10 years ahead and find stocks across the cap spectrum. Valuation orientated buyers of leading businesses around the world. The approach is long term and contrarian.
Bill Kanko, founder and President. Bill was the lead manager for the TrimarkFund and Trimark Select Growth Fund, with combined assets of more than $13 billion.
Pierre Py and Greg Herr are co‐portfolio managers with an average of 20 years investing experience.
Rajiv Jain founded GQG Partners in June 2016, having previously worked at Vontobel Asset Management for 22 years as lead portfolio manager, Head of Equities, CIO and Co‐CEO, responsible for over £30bn of assets.
Ben Whitmore has over 20 years of experience and joined Jupiter in 2006 Ben worked at Schroders, managing both retail and institutional portfolios and around £2 billion of assets. Ben will be supported by Dermot Murphy, Assistant Fund Manager.
15
The equity managers
Source: Willis Towers Watson and individual managers as of December 2016.
StyleManager
The investment process utilises a proprietary Real Return Approach, employed with an absolute return mind‐set, dispensing with any reference to indices. Veritas uses a number of methods including themes to help identify industries and companies that are well positioned to benefit medium term growth regardless of where they are located.
SGA seeks to identify only those very few truly differentiated global businesses that possess strong pricing power, offer recurring revenue generation and benefit from attractive, long runways of growth.
Hugh has put in place a process that helps him identify value at different stages of a company’s lifecycle and to give signals as to when that value might be unlocked. He has shown particular strength in smaller companies and in classic "Recovery" situations.
Value matters most to Lyrical and the team also maintains a strict discipline around investing in quality companies, seeking businesses that they believe will generate attractive returns on their invested capital, are resilient with reasonable debt levels, positive growth, attractive margins, competent management, and the flexibility to react to all phases of the business cycle.
Lyrical Asset Management’s investment management team is led by Co‐Founder and Chief Investment Officer, Andrew Wellington, and includes Co‐Portfolio Manager, Caroline Ritter.
Hugh Sergeant is the CIO of Equities having previously been in a similar role at Societe Generale Asset Management ('SGAM') and prior to that at UBS/Phillips & Drew and Gartmore.
Sustainable Growth Advisers (SGA) was founded in 2003 by George Fraise, Gordon Marchand and Rob Rohn, they average over 30 years of investment experience.
Andy Headley is Head of Global strategies at Veritas Asset Management. Andy has over 20 years investment experience and is supported by Charles Richardson, co‐portfolio manager who has 30 years’ experience.
16
Portfolio management – Willis Towers Watson’s role
Manager weightings target equal
contributions
Choice of managers
defines yield
Number of managers
defines ‘active share’
Choice of managers neutralises
styles
Gearing done at the top level
Overall risk dominated by stock selection
17
The proposed equity portfolio
Overall risk level unchanged
Relative risk dominated by stock selection
Exposure to any one company reduced
0
5
10
15
20
25Breakdown by Industry (%)
0
10
20
30
40
50
60
Breakdown by Region (%)
The information above is based on proposed portfolio allocations and subject to change.Source: Willis Towers Watson, Managers, FTSE ICB, FactSetThe provisional portfolio information was analysed with Towers Watson’s DART analytics reports as of the most recent available date (30/11/2016) and was the underlying data was provided by the sources listed above and/or publically available information.
18
Summary ‐ a more robust approach
Consistent outperformance
At a competitive cost
Continuing the progressive dividend policy
‘The best of the best’
Disclaimer
This financial promotion has been approved by Towers Watson Limited ("Willis Towers Watson"), authorised and regulated by the Financial Conduct Authority. This presentation includes certain information and materials prepared for Alliance Trust plc (the “Company”) by Willis Towers Watson.
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 nor 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 advisor who is authorised under the Financial Services and Markets Act 2000 before making any investment decision.
All financial investments carry risk. The value of an investment, and the income derived from it, if any, may go down as well as up and an investor may not get back the amount invested. Past performance is not a guide to future performance. 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 model investment performance shown in this material reflects the performance an investor may have obtained had it invested in the manner shown. It does not represent the performance that any investor actually attained. Unlike actual performance, it does not represent actual trading. Since trades have not actually been executed, results may have under‐ or over‐compensated for the impact, if any, of certain market factors, such as lack of liquidity, and may not reflect the impact that certain economic or market factors may have had on the decision‐making process if funds were actually managed in the manner shown.
Continued on page 20.
19
Disclaimer
The model investment performance shown is for the stated time period only. Gross model performance is net of likely transition costs, commissions and other direct expenses, but does not reflect management fees, custody charges, and other indirect expenses which an actual account would incur. Net model performance is net of likely transition costs, management fees, commissions, and other direct expenses, but before custody charges, and other indirect expenses. Management fees and expenses reflected in net returns are representative of those fees and expenses which an actual account managed in the indicated styles would incur. Management fees and expenses for actual accounts may vary. All results include the reinvestment of dividends. Differences in account size, timing of transactions and market conditions prevailing at the time of investment may lead to different results. The performance shown is compared to the indicated index.
The presentation is based on information available to Willis Towers Watson at the date of this material and takes no account of subsequent developments after that date. In preparing this material Willis Towers Watson has relied upon data supplied to it by third parties. Whilst reasonable care has been taken to gauge the reliability of this data, Willis Towers Watson provides no guarantee as to the accuracy or completeness of this data and Willis Towers Watson 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.
In the absence of its express written agreement to the contrary Willis Towers Watson and its affiliates and their respective directors, officers and employees accept no 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 SOUTHAFRICA 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
