This week I am looking at Witan Investment Trust, a UK-listed fund that invests in global equities through a multi-manager approach. The manager and CEO, Andrew Bell, has been leading the Trust since 2010 and has been responsible for a significant refinement of the strategy, moving the fund towards managers that have higher conviction portfolios and a greater focus on company fundamentals.
Over the last 18 months the fund has made several changes to the line-up of external managers to reflect the new strategy. Previously, the fund has used index-trackers to gain exposure to Europe and Emerging Markets as the investment team felt that they needed more time to identify suitable active managers. The fund now only consists of active managers and has seen the total number of managers used fall to 10, as Andrew felt they did not need five global portfolio managers and moved the assets to be split evenly between the three in which they had the highest conviction.
Mr Bell and his team feel that with higher global debt, rising interest rates and the reduction of global quantitative easing it was extremely important to focus on portfolios where the managers have the highest conviction in their best ideas. As a result of these changes the fund is now invested in around 350 companies, down from around 550. These changes also mean that its ‘active share’, a measure of how different the underlying holdings are to the index, increased from 70% to 77%.
The multi-manager approach adopted by Witan has proved successful so far and has outperformed the peer group over the long-term. However, the fund does still hold a larger than usual number of underlying holdings. Some funds with this many holdings run the risk of becoming similar to an index-tracker but with higher ongoing costs for the investor.