Strategy: Witan’s Andrew Bell avoids managers ‘fossilised’ in their investment style
Andrew Bell is an atypical overseer of a multi-billion pound investment trust. Rather than manage the equity portfolio himself, he is more of a conductor, ensuring the orchestra of specialist fund managers he has personally selected come together to deliver a satisfactory investment outcome. Sweet investment music.
Unconventional though the approach may be, it seems to be working well. The trust, Witan, has outperformed its global peers over the past five and ten years. It has also grown its dividend every year for the past 43.
Although it appears a hands-off role, nothing could be further from the truth. Bell is constantly monitoring the performance of the managers he has parcelled slices of the trust’s assets out to, and has no compunction when it comes to firing them if they are not performing – reminiscent of feared conductor Terence Fletcher in 2014 film Whiplash.
Since the start of last year, Bell, assisted by an actively involved board, has appointed GQG Partners to run money in emerging markets. He has also brought in Crux – run by Richard Pease – and SW Mitchell to manage European portfolios.
Out have gone MFS Investment Management and Tweedy, Browne and Company as Bell has consolidated his underlying global managers from five to three. The result of all this hiring and firing is that Witan’s £2 billion of assets are now spread across ten investment houses and some 350 equities.
As well as GQG and Crux, key managers include Artemis, Lansdowne Partners, Lindsell Train and Veritas. In addition, a small slice of the portfolio (nine per cent) is managed directly by Bell and primarily invested in private equity funds – the likes of Apax Global Alpha, Electra and Princess Private Equity.
Bell says: ‘What we are trying to do at Witan is create a team of eclectic managers who are renowned for their stock picking. We do not always get it right straightaway but we are constantly striving for the Holy Grail. What we want are managers who are not old and fossilised in their investment styles – who are adaptable to the changing world where a technology revolution is taking place.’
In terms of active management, Witan scores highly – there is not a trace of closet index tracking. This means the returns it achieves for shareholders will not be directly in line with any mainstream stock market. Periods of relative short-term underperformance are therefore likely – as evidenced by the fact that the trust’s performance numbers are not as good as many of its peers in the past year.
None of the managers selected by Bell can rest on their laurels. All bar one are on a month’s notice while all of them have to go before the trust’s board once a year and present their case. Three days ago, five of the investment teams were in Witan’s Westminster offices to do their annual presentations. All survived – for now. Witan’s multi-manager approach is catching on. Global investment trust Alliance has just embraced a similar investment style although it has outsourced the choice of its external fund managers to specialist Willis Towers Watson.
As for the future, Bell is quietly confident that synchronised economic growth worldwide bodes well for stock markets.
If the march to Brexit goes smoothly, he believes the home market could be the surprise package, especially if international investors respond by increasing their exposure to the UK.