- 11% increase in NAV (net asset value)
- Shareholder total return of 14.3% after discount narrows
- Second interim dividend of 1.75p per share announced
Shares in Witan Investment Trust (WTAN) were marginally lower in morning trading at 263p as the investment trust reported a 11% increase in NAV slightly underperforming its composite global benchmark for the six months ending 30 June 2024.
The trust attributed the NAV increase due to the strength of some of the company’s portfolio which had exposure to some of the largest US technology companies.
However, Witan said the trust’s performance was impacted by investing in the GMO Climate Change Investment Fund (GCCHX) politics remaining in flux in some countries in Europe and the forthcoming US presidential elections.
BIGGEST EVER MERGER
Either way, investors have other things on their minds, not least the trust’s giant merger with Alliance Trust (ATST), combining around £5 billion of assets.
Originally announced a couple of months back (26 June), Witan today gave more detail of proposals, although not many. The new proposed investment trust will be called Alliance Witan, thankfully resisting any temptation to adopt a ludicrous acronym.
The enlarged multi-manager trust is anticipated to leverage its greater size to chop back on dealing costs, an encouraging move for investors, and it'll likely jump straight into the blue-chip FTSE 100 index.
Beyond these modest details, not much else was said with detailed documents expected to be published in early September, with shareholders asked to vote on the proposals in early October.
‘Assuming shareholders approve the proposed combination with Alliance Trust, total dividends for the year are expected to amount to the equivalent of not less than 6.28p per share for current Witan/continuing Alliance Witan shareholders, a 4% increase on the 6.04p per share paid in respect of 2023,’ said Witan.
EXPERT VIEW
Laith Khalaf, head of investment analysis at AJ Bell said: ‘The £5 billion merger will probably catapult Alliance Witan into the FTSE 100, where it will sit alongside global competitors F&C Investment Trust (FCIT) and Scottish Mortgage (SMT).
‘Inclusion in the FTSE 100 is likely to increase liquidity and visibility for Alliance Witan, though most passive funds tracking the UK stock market follow the FTSE All Share, and most active funds eschew investment trusts, so we shouldn’t expect this to be a total gamechanger.
‘One of the benefits of the deal for both sets of shareholders will be lower annual management fees, expected to come at a basis point ratio in the high 50s. In other words, somewhere between 0.55% per annum and 0.6% per annum.
‘For Alliance Trust shareholders the investment strategy continues as expected, with no dilution to NAV and lower annual charges, so there would seem to be little to ponder about continuing to invest.
‘For Witan investors there is also a lower annual management fee and the potential for a turnaround in performance after a fallow few years. But while there are similarities in the investment approach, they are by no means identical, so Witan shareholders will need to mull over whether the new combined trust is up their alley. If not, they are being offered a cash exit at a little below NAV, though this may be scaled back depending on demand.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Steven Frazer) own shares in AJ Bell.
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