Alliance Witan ALW on Friday hailed a “pivotal” year but bemoaned a lack of exposure to the “Magnificent Seven” in 2024, which limited performance.
The firm, formed by the merger of Witan Investment Trust and Alliance Trust, entered the FTSE 100 in the December quarterly index reshuffle. It has a market value of around £4.85 billion.
Chair Dean Buckley said: “This was a pivotal moment in our history, achieving economies of scale and elevating the company to the FTSE 100. Now, as one of the industry’s leaders, this status will provide better liquidity for our shares and, with good long-term investment performance and a strong brand, help us attract new investors.”
The investment trust said net asset value per share increased 11% to £13.05 at December 31 from £11.75 a year prior.
It achieved a net asset value total return of 13.3% in 2024, although this lagged a 21.6% return for 2023 and trailed its benchmark, the MSCI all country world index, which delivered a 19.6% return.
In response, shares in Alliance Witan were 1.0% lower at £12.08 each in London on Friday morning.
The firm said its relative performance in 2024 suffered from not “having enough exposure to the small number of very large companies that dominated market returns, especially in the US”.
“Although we benefitted from owning Amazon.com AMZN and Microsoft MSFT, we moved from an overweight to an underweight position in Nvidia NVDA in the first quarter after its extraordinary outperformance, which then made it our biggest single detractor last year as that outperformance continued,” it said.
“Having helped us in the first quarter, the lack of exposure to Tesla TSLA and Apple AAPL, which both recovered strongly as the year progressed, counted against us from then on. Overall, our positions in the ‘Magnificent Seven’ accounted for a third of the portfolio’s underperformance versus the Index in 2024.”
Not owning enough Nvidia was “painful”, Alliance Witan added.
The total dividend for 2024 is 26.70p per share, up 6.0% on-year from 25.2p per share, and including a fourth interim payout of 6.73p. Alliance Witan noted this is the 58th consecutive increase in the dividend.
“Dividends are well supported by revenue and reserves, and the board is confident annual dividend increases can continue well into the future,” Alliance Witan said in a statement. It said it will continue to use share buybacks as appropriate.
Buckley said 2024 had been another good year for global equity markets but tariffs have created “uncertainty about the outlook for equities”.
“Diplomatic tensions over efforts to end the war in Ukraine and conflict in Gaza have also raised geopolitical risks”, while “European bond markets are adjusting to the prospect of increased borrowing”.
Looking ahead, Buckley commented:
“While there is a risk that heightened levels of uncertainty will impact on business and consumer confidence, global growth and corporate earnings forecasts are currently healthy, giving some grounds for cautious optimism, about further gains for shareholders, especially if there is a broadening out of market leadership.”
Buckley believes its portfolio will continue to add significant value for shareholders in the long run.
By Jeremy Cutler, Alliance News reporter
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
