FTSE 250 group Alliance Trust said its first-half performance has been impacted by a movement in the equity markets towards shorter-term “value” stocks.
The Dundee-based generalist investment house posted a net asset value (NAV) total return of 0.3% in the six months to June 30, and the Trust’s share price nudged 0.4% ahead over the period.
However, the return was significantly below the 1.6% NAV total return delivered by AIC Global Sector a peer group benchmark against which AT’s relative performance can be measured which also saw its share price increase by 3%.
Alliance Trust yesterday said equity portfolio performance had been hit by “market rotation” which had seen a switch of focus by investors. It said value stocks had been favoured in the period over the type of growth stocks in which AT was heavily invested.
The Trust also said some of its specific holdings underperformed in the period, and its fund managers moved to address the situation with the ditching of high-profile holdings including Barclays, BNP Paribas and Mattel, and a strengthening of its position in key stocks such as Visa.
Overall, the Trust’s quoted equity portfolio was further streamlined in the period to 88 stocks with a collective total value of £2.54 billion.
CEO Katherine Garrett-Cox said the Trust continued to focus on delivering long-term value for its shareholders and was positioned for profitable growth.
“We remain committed to our investment approach, which is focused on finding high-quality companies with strong fundamentals. Over the past six months, equity markets have favoured value stocks as opposed to the ‘growth’ companies towards which our equity portfolio is more heavily weighted.
“We have also seen some stock-specific underperformance in our portfolio and have taken steps to address this, selling out of certain holdings and increasing our position in those where we have a higher level of conviction in the investment case.”
The Trust’s two main subsidiaries Alliance Trust Investments (ATI) and Alliance Trust Savings (ATS) both posted half-year operating losses. A reverse of £1.6 million for ATI, which has assets under management of £2.2bn, represented a marginal improvement on the £1.7m loss posted in the same period a year ago.
The firm bucked market trends by securing £81m of new business from investors in the period, including the addition of a new corporate pension fund.
ATS saw assets under management rise 10% to £5.9bn but the Trust said profitability in the division had been hit by factors including the phasing of spend by savers and a reduction in customer numbers following recent changes to its price-base.
However, the firm said it was confident it had the right business model in place to ensure long-term growth.
Mrs Garrett-Cox said: “Our aim is to be widely recognised as the UK’s most trusted investment and savings business, and we have made steady progress in 2014. We continue to position Alliance Trust for profitable growth and are focused on delivering long-term value for our shareholders.”
Shares in AT closed up 0.50p at 449.10p.