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Alliance Trust PLC Avrio Anoikti Society: Investment Strategy & Portfolio Diversification

Alliance Trust PLC Avrio Anoikti Society: Investment Strategy & Portfolio Diversification Karen McNab Alex Ebeling Rebecca Fenton March 2012. Avrio Anoikti Society: Session Content. Alliance Trust, Company Overview Karen McNab Investment Strategy Alex Ebeling

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Alliance Trust PLC Avrio Anoikti Society: Investment Strategy & Portfolio Diversification

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  1. Alliance Trust PLC Avrio Anoikti Society: Investment Strategy & Portfolio Diversification Karen McNab Alex Ebeling Rebecca Fenton March 2012

  2. Avrio Anoikti Society: Session Content • Alliance Trust, Company Overview Karen McNab • Investment Strategy Alex Ebeling • Asset Allocation Rebecca Fenton • Starting Your Own Portfolio

  3. Alliance Trust - What We Do • Alliance Trust PLC is a self-managed investment trust • A FTSE 250 company • It has been investing since 1888 • It is the largest generalist UK investment trust by market value on the London Stock Exchange • Current shareholder base of 593,301,146

  4. Alliance Trust - Structure

  5. What is an Investment Trust? A Collective Investment Vehicle where: • Investors capital is pooled together from a fixed number of shares.Hence, investment trusts are known as a closed-ended funds. • Capital is managed either in house or outsourced, the manager invests these funds in different asset classes across the globe. • They are traded on stock exchanges - ours is listed on the LSE. • They can borrow a large percentage of capital from banks to leverage positions; this is called gearing.

  6. Alliance Trust Investments • Launched in February 2009 • Since launch has raised in excess of £380 Million • Provides a range of core, long term investment funds (OEICs) • 5 Equity Funds: North America, Japan, Asia Pacific (ex-Japan), Europe, UK and Global. • 1 Fixed Income Fund: Monthly Income Bond Fund • Managed by highly experienced, tight-knit investment teams

  7. Alliance Trust Savings • ATS is a leading wealth products and platform provider. • ATS offers access to a wide range of investment opportunities including: • Funds • Global Equities • Investment Trusts • These investments can be held in a range of ‘wrap’ accounts including: • SIPP’s (Self Invested Personal Pension) • ISA’s (Individual Savings Account) • Investment Dealing Accounts • Exchange Traded Funds • Fixed Interest Securities • Property

  8. Investment StrategyHigh Level Overview • Active vs. Passive Management • Top Down vs. Bottom Up • Value vs. Growth • Asset Class • Gearing • Hedging (Derivatives) • Short Term vs. Long Term • Open vs. Closed Ended

  9. Investment StrategyAlliance Trust Portfolio Review

  10. Investment StrategyGlobal Thematic Opportunities Fund • Unconstrained • Any Region, Sector, Market Cap or Benchmark etc. • Identifying Structural Themes • E.g. Demographic or Environmental changes • Exploit Short-Term Overreactions • Benchmarked against the MSCI All Country World Index

  11. Global Thematic Opportunities Fund Example of Structural Themes

  12. Investment StrategyUK Equity Income Fund • Focus on capital growth and income generation. • Concentrated portfolio, constrained by a high dividend bias. • Provides dual return to investors through regular income payments and the prospect of capital accumulation. • Benchmarked against the FTSE All Share

  13. Asset Allocation • Equity exposure concentrates on four geographical regions: • UK • North America • Europe • Asia • Continual work on streamlining portfolio to deliver improved investment performance

  14. Geographical Split – percentage of assets

  15. Geographical weights in relation to index

  16. Geographical Weight / Revenue Split

  17. Holdings

  18. Top 10 Holdings

  19. Derivatives & Hedging • Use derivative instruments to hedge, enhance and protect positions, including currency exposures • Limited to assisting with market timing for efficient portfolio management • Typically invest in futures in order to adjust regional weightings • Currency fluctuations can have a significant impact on the value of overseas holdings • Monitor movements • Take action to protect against them • Example • Borrow in Euros with the view the currency would weaken • Reduces exposure to weakening Euro and protects value of our underlying equity holdings • Forward exchange contract to the Japanese Yen • When UK Pound strong, increase weighting to US Dollar, unwind as Pound weakened • Strategies added to performance

  20. Starting Your Own Portfolio • Stick to sectors and companies you know about! • Try to take a top-down and bottom-up point of view. • Keep current equity market trends in mind. • Avoid stock tips from newspapers and popular publications.

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