This week I am focusing on Witan, an investment trust aiming to provide investors with a balance of capital growth and income over the long term through a portfolio of global equities.
Witan’s structure has been significantly overhauled since 2010 following the appointment of Chief Executive Officer Andrew Bell, who selectively employs reputable, specialist fund managers to run different portions of the portfolio. The managers are considered by Mr Bell to be the best in their assigned regions and likely to generate long-term outperformance. Indeed, the strategy has proved successful thus far given that Witan’s net asset value (NAV) has grown by 53% over the past five years compared with 39% from the IMA Global sector.
Despite this outperformance, the price at which Witan’s shares are trading has shifted from a 2% premium to NAV in January to a 5% discount at the time of writing. While turbulent stock markets have led to many investment trusts’ discounts widening year-to-date, for Witan this is only part of the story. Specifically, the price weakness can also be attributed to a large shareholder that was recently forced to sell their 16% stake due to the holding no longer being compatible with its new mandate.
On the one hand, it could be argued that Witan is relatively expensive as it has historically traded at significantly wider discounts to its NAV. On the other hand, it could be argued that wider discounts are unlikely to be reached again given the Board’s ability to buy back shares as part of its discount control mechanism as well as the fund’s excellent track record under Mr Bell.