ALLIANCE TRUST: The ‘dividend hero’ ready to maintain his amazing track record

Global investment trust Alliance is on a roll, much to the delight of shareholders. In terms of dividends and capital returns, it delivers the goods.

This month it will pay shareholders the first quarterly dividend of the new financial year. At a share of 6.62 per year this is not surprising, but it is higher than what was paid twelve months ago (6.18 pence).

And investors can be confident that the trust’s record annual dividend growth will be extended to 58 years next March, when the final dividend of the year is paid. The shares are now trading just under £12.

This is because Alliance, along with rivals City of London, Bankers and Caledonia, has the longest record in the investment trust sector for consecutive years of dividend increases.

It’s one that has been awarded ‘dividend hero’ status by the Association of Investment Companies – which the trust doesn’t want to lose.

As for share price gains, Alliance doesn’t do much wrong either. Over the past six months and the past year, this was 13 and 18 percent respectively.

“Yes, the trust is going through a good period,” says Craig Baker, one of three people at Willis Towers Watson (WTW) pulling the fund’s investment ropes. ‘Our selection has been good.’

The fund, with a capitalization of £3.4 billion, differs from most other global funds in the way assets are managed. Rather than employing one investment group, the trust’s board uses WTW to divide the fund’s assets among what it considers the best managers in their class.

The result is ten fund managers, chosen from around the world, who manage eleven portions of the trust’s assets.

With the exception of a basket of about 40 emerging market stocks overseen by Florida-based GQG, each segment consists of no more than 20 stocks. Key fund groups used by the firm include Black Creek, GQG (dual portfolio manager), Lyrical, SGA and Veritas.

The choices of these top fund managers result in a combined portfolio of 215 global stocks. The top holdings include some of the major US tech companies (such as Alphabet, Microsoft, Amazon and Nvidia), although Baker insists there is more to the confidence than just these favorable stocks.

The managers, he says, are always looking for future winners, such as Japanese machine parts maker Misumi and Brazilian energy company Electrobas.

WTW’s role goes beyond selecting the best managers. It constantly monitors the performance of its elected managers and shifts money between them so that no one controls too much.

Occasionally it will also say goodbye to investment firms when they think they are no longer a good fit – and bring in new eyes.

The last change was earlier this year when Jupiter was replaced by ARGA – a result of the Jupiter manager using WTW for the trust (Ben Whitmore) deciding to set up his own investment business.

“Whitmore remains a good manager and we may return to him once his boutique investment house is up and running,” Baker said.

‘But we know ARGA Investment Management and its founder very well and we are happy to have their expertise on board.’

The trust has its own website (alliancetrust.co.uk) and has taken to the airwaves to promote its suitability as a long-term investment – ​​tagline: ‘Find your comfort zone’.

Some say it is a sign of the trust the trust’s board has in WTW.

Alliance’s ongoing costs are low: 0.62 percent. The stock market identifier is B11V7W9 and its ticker is ATST.