10:28 Wed 28 Jul 2010
Witan drops Wellington in European restructure
Witan Investment Trust has made its first significant portfolio change since Andrew Bell (pictured) took over as chief executive in February, by restructuring its European mandates.
It has also declared its intention to make greater use of derivatives going forward across many of its 13 investment mandates.
The trust has expanded Marathon Asset Management's remit to include a Europe ex-UK portfolio to be run alongside its existing UK portfolio, with US-based Wellington Management Company losing its Europe ex-UK mandate as a result.
The change means Marathon will now run an enlarged pan European portfolio of some £120 million.
With the enlarged portfolio, Marathon will run around 14% of the assets within the £1 billion trust while Witan's other pan-European manager, Varenne Capital Partners, will continue to manage a smaller private equity style portfolio, accounting for around 3% of the portfolio.
Another potential sign of Bell's influence at the helm is the declaration that the trust will move to make greater use of equity index futures.
Witan has been using equity index furtures to increase equity exposure since early June and has used them to maintain market exposure during the transition of the European equity index from Wellington to Marathon.
Its statement said: ' The company views [equity index futures] as a valuable source of flexibility in a multi-manager portfolio where medium-term stock decisions by the managers are a significant feature and where, as a result, direct disinvestment is an imperfect way of adjusting shorter term market exposure.
'This ability also enables Witan to adjust its asset allocation, in the event that stock-driven decisions by managers take the geographical asset allocation outside a desired range.'
The move comes after a period of improved performance for the global growth trust. Over the past two years to the end of June, its net asset value (NAV) is up 16.6% compared to 9.9% for the FTSE All Share and 15.0% for the FTSE World ex UK.
It also outstrips the NAV growth of all of its global growth peers over the same period.
Bell said: 'Marathon is a well established manager of European equities with an outstanding track record. By broadening their mandate we have increased their universe of stocks and therefore their scope to find the best companies in sectors that meet their capital cycle investment strategy.
He added: 'The use of equity index futures enables us to take advantage of investment opportunities arising from outbreaks of volatility in financial markets and to make adjustments to our asset allocation, without interfering with the stock picking role of our appointed investment managers.'
The trust is currently trading at an 11.8% discount.
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