Alliance Trust PLC : Interim Management Statement
3 May 2013
Objective
Alliance Trust is a self-managed investment company with investment trust status. Our objective is to be a core investment for investors seeking increasing value over the long term. We have no fixed asset allocation benchmark and we invest in a wide range of asset classes throughout the world to achieve our objective.
Our focus is to generate a real return for shareholders over the medium to long term by a combination of capital growth and a rising dividend.
Financial Highlights for the 3 months to 31 March 2013
| 31 March 2013 | Change (%) | Total Return (%) | |
| Share Price | 430.1p | 14.6 | 15.2 |
| NAV per share (inc income) | 502.2p | 12.9 | 13.6 |
| Discount (inc income) | 14.4% |
Key Information
| Total Assets (£m): | £3,152m | EPIC Code: | ATST |
| Net Assets (£m): | £2,812m | Year End: | 31 December |
| Total Borrowings (£m): | £340m | Date of Incorporation: | 21 April 1888 |
| Net gearing: | 12.1% | Issued Share Capital: | 561,579,146 |
| Dividends paid: | April, June, September, December |
| Ongoing Charges Ratio (to 31 Dec 12): | 0.67% |
Source: Alliance Trust
Review of the three months to 31 March 2013
The Trust's Total Shareholder Return for the first quarter of 2013 was 15.2%, and the NAV total return (with debt at fair value and inclusive of income) was 13.6%. This was our best first quarter performance in over 15 years. The continuing strong performance from global equities has fuelled this and, in local currency terms, the MSCI All Country World Index is up 8.6% YTD, but 14.1% in Sterling terms.
Over the quarter, the best performing sectors were Health Care (+22.3%), Consumer Staples (+19.5%) and Consumer Discretionary (+16.4%). Sterling weakened, so having less than one quarter of the Trust's equity exposure in the UK has had a positive impact on the portfolio.
The cum income discount traded in a tight range between 13.3% and 15.6% and finished the period at 14.4%. There were no buy backs during the period.
Portfolio update
Over the period we have increased the level of gross gearing in the Trust from 8% to 12%. The total global equity exposure has risen from 89% to 96% of NAV and the Fixed Income exposure has reduced slightly from 9.6% to 8.5%, mainly due to the outperformance from equities. This balance is consistent with our view that there are significant opportunities for equity investors over the medium and longer term. Portfolio activity in the quarter has been driven by three main factors; the changes to the level of gearing, portfolio optimisation following the major restructuring of last year and stock specific activity driven by our fundamental analysis of companies.
There have been a number of significant changes to the equity portfolio over the first quarter; these can be seen in the table of our top 20 holdings. However, notable new additions are Walt Disney, Zurich Insurance, Barclays and Infineon Technology. These account for some £140m of the £220m of new holdings initiated over the period. These have been funded by the increased gearing, profit taking in specific holdings and sales of stocks including Lloyds, Ericsson, BG Group, ARM Holdings and Apache Corp. Our two largest sector exposures remain in Financials and Health Care, while Information Technology has replaced Industrials as the third largest sector. Our regional equity exposure is largely unchanged over the quarter.
Alliance Trust Investments
The first quarter of 2013 included two milestones for Alliance Trust Investments. On 31 January 2013, we completed the transition of the Sustainable Future funds into the Alliance Trust ICVC, renaming them all under the Alliance Trust Investments brand, and by the end of the quarter, Assets Under Management (AUM) exceeded £2bn for the first time. Given that the business started just over 4 years ago, with no third party funds, we believe that this is a credible performance and recognition of the ability of our investment teams and provides us with a great springboard for growing the business.
We now have a range of 13 funds. Of the nine funds which have a three year track record, six are ranked above median in their peer group. In addition, the Alliance Trust Monthly Income Bond Fund was the top performing fund in 2012 and remains in the top quartile of corporate bond funds over the last 12 months.
Alliance Trust Savings
We have made good progress in the first quarter of 2013. As anticipated, the introduction of the Retail Distribution Review (RDR) has had a positive impact on the business with Assets under Administration increasing by 15% to £4.6bn. We have seen a 54% increase in the numbers of accounts opened in Q1 2013 as compared to Q1 2012 and total inflows of new business from advisers in the first quarter of 2013 is greater than that which we saw in the whole of 2012 as they increasingly seek a cost-effective platform for their clients in light of RDR.
We also took the decision to become an early adopter of "clean" share classes, where the only charges levied are those retained by the manager. This further enhanced our transparent charging structure well in advance of the implementation of RDR 2 which will come into effect in April 2014. The recent announcement by HMRC that all fee rebates passed onto the client will be taxable from 5th April 2013 will further enhance the appeal of clean share classes to the investor and will hasten the demise of old share classes. Alliance Trust Savings is one of the very few platforms which offers a full set of clean share classes.
The market and regulatory changes are providing a welcome tailwind to the development of the business which has seen increased levels of interest from potential customers.
Outlook
We continue to monitor both the domestic and international economic backdrop and we do not anticipate the global economy slipping into recession. However, we remain focused on the global thematic long-term drivers of stock specific returns which dominate stock price movements over time. We feel this is a prudent approach and adds value, throughout the economic cycle, and is consistent with our objective of delivering an increasing Total Shareholder Return on a sustainable basis.
Cumulative returns (%) periods to 31 March 2013
| YTD | 1 Year | 2 Years | 3 Years | 5 Years | |
| Share Price | 15.2 | 19.7 | 24.1 | 35.6 | 49.0 |
| NAV* | 13.6 | 17.8 | 17.9 | 26.0 | 41.1 |
Source FactSet & Morningstar
*NAV is calculated with debt at fair value and including accrued income
Past performance is not a guide to future performance.
Asset Allocation (%)
| 31-Mar-13 | 31-Dec-12 | |
| Equities | 95.7 | 90.1 |
| Fixed Income | 8.5 | 9.6 |
| Private Equity | 4.1 | 4.4 |
| Operating Subsidiaries | 1.7 | 1.1 |
| Property | 0.7 | 0.8 |
| Cash | 0.3 | 1.3 |
| Other Assets | 1.0 | 0.8 |
| Gross Assets | 112.1 | 108.1 |
| Gearing | (12.1) | (8.1) |
| Net Assets (incl income) | 100.0 | 100.0 |
Source: Alliance Trust
Equity portfolio geographic breakdown (%)*
| 31-Mar-13 | 31-Dec-12 | |
| United Kingdom | 22.9 | 24.0 |
| North America | 44.2 | 44.1 |
| Europe Ex UK | 17.7 | 16.5 |
| Asia | 15.1 | 15.3 |
| Emerging Markets | 0.1 | 0.1 |
Source: Alliance Trust
| Equity portfolio sector allocation (%)* | ||||
| 31-Mar-12 | 31-Dec-12 | |||
| Financials | 21.9 | 19.8 | ||
| Health Care | 14.0 | 13.6 | ||
| Information Technology | 13.8 | 14.9 | ||
| Industrials | 11.9 | 11.7 | ||
| Consumer Staples | 9.9 | 10.9 | ||
| Consumer Discretionary | 8.0 | 7.5 | ||
| Energy | 7.4 | 8.1 | ||
| Materials | 5.5 | 6.5 | ||
| Utilities | 4.9 | 4.6 | ||
| Telecommunication Services | 2.6 | 2.3 | ||
| Source: Alliance Trust | ||||
Equity portfolio top 20 holdings*
| 31 Dec 2012 | Direction | 31 Mar 2013 | Holding | % of Equity Portfolio |
| 1 | - | 1 | Pfizer | 2.8 |
| 3 | Up | 2 | Qualcomm | 2.4 |
| 5 | Up | 3 | United Technologies | 2.2 |
| 2 | Down | 4 | Samsung Electronics | 2.2 |
| - | New | 5 | Walt Disney | 2.0 |
| 6 | - | 6 | Enterprise Products Partners | 2.0 |
| 4 | Down | 7 | Royal Dutch Shell | 1.9 |
| 17 | Up | 8 | HSBC Holdings | 1.7 |
| 11 | Up | 9 | Prudential | 1.6 |
| 7 | Down | 10 | Diageo | 1.6 |
| 12 | Up | 11 | CVS Caremark | 1.6 |
| - | New | 12 | Zurich Insurance Group | 1.6 |
| 8 | Down | 13 | Express Scripts | 1.6 |
| 19 | Up | 14 | Danaher | 1.3 |
| 18 | Up | 15 | Unilever | 1.3 |
| - | New | 16 | Roche Holding | 1.2 |
| - | New | 17 | Wells Fargo & Co. | 1.2 |
| - | New | 18 | Oceaneering International | 1.2 |
| - | New | 19 | Sanofi | 1.2 |
| 9 | Down | 20 | Apple | 1.2 |
Source: Alliance Trust
*Weightings are calculated on a look-through basis whereby the Trust's exposure is combined with that of its holdings in Alliance Trust Investments' funds in order to calculate total exposure.
The views, information and data in this statement should not be deemed as a financial promotion or recommendation. Alliance Trust PLC, Alliance Trust Savings and Alliance Trust Investments are not authorised to give financial advice.
For further information, please contact:
| Evan Bruce-Gardyne | Conor McClafferty / Clare Dundas | |
| Head of Investor Relations, | RLM Finsbury | |
| Alliance Trust PLC | Tel: +44 (0)20 7251 3801 | |
| Tel: +44 (0)1382 321169 | Email: alliancetrust@rlmfinsbury.com | |
| Email: investor@alliancetrust.co.uk | Web: www.rlmfinsbury.com | |
| Web: www.alliancetrust.co.uk |
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.
Source: Alliance Trust PLC via Thomson Reuters ONE
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