‘The days of 15pc growth in UK stocks are over’

The Daily Telegraph - Your Money - - FRONT PAGE -

Re­cent stock mar­ket dips are a mere blip for a fund that has been run­ning money for more than 100 years. The £1.1bn Wi­tan in­vest­ment trust was es­tab­lished in 1909 and has de­liv­ered 42 con­sec­u­tive years of ris­ing div­i­dends.

The chief ex­ec­u­tive, An­drew Bell, ex­plains why he is ex­cited about Europe, why pri­vate eq­uity has paid off and why he doesn’t just want cheap man­agers.

We al­lo­cate as­sets to un­der­ly­ing fund man­agers rather than run the money our­selves. There are three up­sides: we can play to man­agers’ strengths; be­cause we have 10 or 20 man­agers it is not as wrench­ing to change a man­ager and we are more likely to con­sider do­ing so; and we hope that the peaks and troughs of man­ager per­for­mance do not co­in­cide, to smooth out per­for­mance.

We also di­rectly in­vest up to 10pc of the port­fo­lio our­selves, where we think there are op­por­tu­ni­ties that our man­agers would not buy. We tend to buy other col­lec­tive funds, rather than stocks. This al­lo­ca­tion has var­ied be­tween 5pc and 13pc of the port­fo­lio – at the mo­ment it is 9pc. It re­turned around 27pc last year, com­pared with the bench­mark’s 15pc.

Wi­tan’s An­drew Bell tells Laura Suter where he ex­pects to find the strong­est per­for­mance this year

Last year we ap­pointed an emerg­ing mar­ket man­ager, GQG, hav­ing used “tracker” funds for a while. We also went from five global man­agers to three, as we felt that we had some over­lap be­tween them.

We had been look­ing at Europe for a while, as we had been un­der-al­lo­cated to it for some time. As the Macron phe­nom­e­non came along we bought more Europe tracker funds, but we started a search for a high-con­vic­tion Euro­pean man­ager. We ap­pointed SW Mitchell Cap­i­tal and Crux As­set Man­age­ment. This is more change than we would nor­mally have in a year.

CV: An­drew Bell

An­drew Bell be­came chief ex­ec­u­tive of Wi­tan in 2010. He was pre­vi­ously head of re­search at Rens­burg Shep­pards In­vest­ment Man­age­ment.

Be­fore mov­ing into in­vest­ment man­age­ment he worked at oil com­pany Shell. De­spite the fact it is ev­ery­one’s favourite area, I think Europe will sur­prise on the up­side, I think profit growth there will be pretty de­cent. A po­ten­tial con­trar­ian play is the UK, as it has a lot of cheap stocks in it. But that cheap­ness is not likely to re­verse un­til the Brexit and re­lated po­lit­i­cal risks have been re­solved. A rea­son­able value in­vestor should be alert to the op­por­tu­ni­ties in Bri­tain. Around 30pc of our as­sets are in UK shares.

There has been a lot of com­pla­cency in the past year-and-a-half in the stock mar­ket. I think it was bet­ter that we had a small cor­rec­tion now to re­store val­u­a­tions to de­cent lev­els to cre­ate a bet­ter plat­form for more durable gains in the fu­ture. It is dif­fi­cult to see how we will get 15pc to 20pc growth, but there is noth­ing wrong with a few years of 3pc to 7pc growth. Aim-listed clean tech in­vest­ment fund called Ludgate En­vi­ron­men­tal in about 2010 and it went down by about three-quar­ters. The over­all on­go­ing charges fig­ure is 0.79pc. More of our fund man­agers used to have per­for­mance fees, but the pro­por­tion has fallen from 70pc of the man­agers to 15pc.

We aren’t just look­ing for cheap man­agers, we want the high­est re­turns for a price – in fact our strong­est man­ager over the past three to four years has the high­est fees. We hope to re­duce costs, but my fo­cus is to de­liver per­for­mance af­ter costs. I would rather de­liver 4pc of out­per­for­mance on 0.75pc fees than 1pc of out­per­for­mance on costs of 0.5pc. At the end of last year Syn­cona was the sec­ond big­gest hold­ing in the fund. It is one of our di­rectly in­vested as­sets.

It was set up by the Well­come Trust to back good sci­en­tists build­ing new phar­ma­ceu­ti­cal com­pa­nies. It cre­ated an ini­tial port­fo­lio of £100m-£200m, but then at the end of 2016 it took over the Bat­tle Against Can­cer In­vest­ment Trust, which was pre­vi­ously a fund of funds. This means the health­care por­tion of the port­fo­lio went from 20pc to 50pc. On the back of that the trust’s shares went to trad­ing on a pre­mium of about 30pc to the net value of the as­sets and the share price went from about 130p to about 200p.

We have barely made any changes to the al­lo­ca­tion, but it has be­come a

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