Witan Pacific Investment Trust plc Annual Results

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  • 06 mins 20 secs
James Hart, Investment Director, Witan Investment Services and Susan Platts-Martin, Chair, Witan Pacific Investment Trust plc, discuss the drivers of performance, changes to the portfolio, the policy behind dividends, why active share is relevant and their outlook for the remainder of 2018.


Witan Investment Trust
PRESENTER: To discuss Witan Pacific’s annual results, I’m joined now by Chair Susan Platts-Martin and Executive Manager James Hart. Susan, in the 12 months to the end of January 2018 the trust’s total return net asset value rose some 17.3%, the benchmark was up 17.9% and the total return share price rose 22.1%. What have been the main drivers of performance?

SUSAN PLATTS-MARTIN: This was a good year of performance from the region. The backdrop to this was global economic growth strengthening and broadening, and earnings growth especially in Asia improving markedly. The technology sector in the region performed exceptionally well during the course of the year. Our managers were a little bit cautious on the sector and as a result were underweight, which was a bit of a drag on performance. That said they were overweight other stocks in the region that performed very well.

PRESENTER: During the year Witan Pacific has made some significant changes to the portfolio. You’ve added in Robeco and Dalton Investments, and you’ve sold the holding in GaveKal Asian Opportunities UCITS. What are the reasons for those changes?

SUSAN PLATTS-MARTIN: Whilst the company’s absolute performance has been good since the implementation of the multimanager strategy, the relative performance in recent years has not been as consistently good as we would have liked. One of the key advantages of the multimanager structure is that we’re not tied to one particular management house, and that enables the board to select specialist managers from a broad spectrum. In addition, we have the benefit of making a manager change without there being a wholesale change to the portfolio, which is the case when there’s a sole manager running a portfolio. So we’ve moved from the three managers to four managers, and we think this helps with the other offering as a one-stop shop for Asian equity investment. And we now have a line-up of four specialist investment managers that investors couldn’t access directly, or if they could not at the cost that we’re able to offer.

PRESENTER: And James how do you expect those changes to affect the Witan Pacific portfolio overall?

JAMES HART: Well the line-up of four managers broadens the roster and should help iron out the peaks and troughs of performance of individual managers because you’re spreading the performance over a wider base. They’re all specialists in the Asia Pacific region, and in fact their mandates are to invest across the region, but they do it in different ways. And I would expect going forward that the portfolio might have more exposure to smaller or lesser known companies, but it’ll still retain exposure to the region’s larger stocks as well. So overall we’d expect the portfolio to be dominated by quality companies that grow over the long term but are priced at attractive valuations.

PRESENTER: Witan Pacific has grown its dividend 15.8%; it’s now up to 5.5p per share. Now this is the 13th consequence year that you’ve grown the ordinary dividend, what’s the overall policy behind dividends at the trust?

SUSAN PLATTS-MARTIN: We aim to grow the dividend in real terms over the long term. And we’ve been able to do this this year and grow the dividend quite substantially for two reasons. The first being the increased dividend receipts we’ve had from portfolio companies due to increased earnings growth. And secondly due to the change in policy for charging management fees now split between capital and revenue in line with expected returns from the portfolio.

PRESENTER: At year end the portfolio had an active share of around 72%, what exactly does that mean and why is it relevant?

JAMES HART: Well an active share is a measure of how different a portfolio is from the benchmark that it’s aiming to beat. So an active share is zero, I mean it looks like the benchmark, and an active share of 100 would mean it’s very different from the benchmark. Our active share of 72% indicates that it’s quite different from the benchmark and therefore has the ability to outperform, but obviously this is by no means a guarantee. That’s why we do an awful lot of work on the managers we appoint to make sure that their wit and their process enables them to pick stocks that are more likely to outperform.

PRESENTER: And what’s the outlook for Asian equities over the next 12 months?

JAMES HART: Well it’s worth remembering the reasons for investing in Asia, and it’s home to 60% of the world’s population, fast growing economies and the home to many innovative businesses. Its prospects for the year ahead are probably inextricably linked with the prospects for global equities, and on that level we remain positive that global economic growth and corporate earnings growth should be supportive for global equities and in turn for Asian equities, which still retain a valuation level that is more attractive than stocks around the world.

PRESENTER: James Hart, Susan Platts-Martin, thank you both very much.

JAMES HART: Thank you.