Malta: Investing With Conviction In A Challenging Period
Last Updated: 27 July 2015

Results For The Six Months Ended 30 June 2015

Karin Forseke, Chair of Alliance Trust PLC commented that:

"The first half of 2015 was a particularly challenging period for Alliance Trust. In the run up to our AGM a significant proportion of our shareholder base indicated that they sought change. The Board has listened to these concerns and is actively engaged in addressing them. The Board anticipates announcing, in the Autumn, the changes that it intends to make.

Anthony Brooke and Rory Macnamara have joined the Board. Our ongoing search for a further non-executive director is also progressing well and we are now approaching the final stages of that process."


  • Alliance Trust delivered a NAV Total Return of 1.4% and Total Shareholder Return of 2.7%. The portfolio returns during the period were disappointing. They were adversely affected in the second quarter of the year by weakness in some of our income holdings
  • Our equity team has delivered outperformance relative to its benchmark since it took over responsibility for the portfolio in September 2014.
  • We have continued the process of reducing the number of holdings in the equity portfolio. There were 68 positions at the end of the period, compared to 88 twelve months ago. This is an historically low number for the Trust and reflects the confidence that we have in our investment process.
  • Towards the end of June, we drew down a further £82m of borrowings in order to increase our exposure to equities to 100%. With a current weighted average cost of borrowing of 2.0%, we expect that this will enhance returns from the equity portfolio in the future.
  • The strong performance of Alliance Trust Investments' specialist fund range has resulted in higher revenues and reduced losses. At the time of writing, all of our benchmarked funds are ranked above median in their peer groups in the current year. In the first half of the year the funds reported net inflows of £59m.
  • Alliance Trust Savings' assets under administration rose by 12% to £7.2bn driven almost entirely by new business inflows. The business made an operating loss from continuing activities of £0.2m due to planned seasonal marketing spend. The purchase of Stocktrade will increase the assets under administration by around 60% to over £11bn and is a significant step towards our ambition of becoming one of the top five platforms in the UK by 2020.

Commenting on the results for the first six months of 2015, Katherine Garrett-Cox, Chief Executive of Alliance Trust PLC, said:

"We are reporting today on the six month period to 30 June, during which time we have underperformed a number of our peers. However, much of the underperformance occurred in June when the sharp rise in bond yields affected the return. While the results for this specific period were disappointing, it should be noted that since the equity team took over responsibility for the portfolio in September 2014, the equity portfolio has outperformed its MSCI All Country World Index benchmark. At the time of writing, the NAV return is now in line with the peer group sector average, enabling us to build a long-term track record that we expect will narrow the discount over time.

Our objective is to maximise shareholder value by delivering a combination of long-term capital growth and a consistently rising dividend. We aim to achieve this through a portfolio which provides low risk exposure to global equities. Over the period, we have reduced the number of holdings in the portfolio to below 70. This is an historically low number and illustrates our confidence in our investment process. This concentration means that we are putting higher levels of conviction behind every holding and we are confident that this will deliver superior returns in the long term, albeit recognising that there can sometimes be periods of stock specific underperformance.

Looking ahead, it is clear that the uncertain outlook for both Greece and China has the capacity to affect equity markets for some time to come. We are confident that the team's focus on investing in well-managed businesses for the long term will help insulate the portfolio from market volatility while continuing to generate returns for our shareholders."

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