Profile: Witan Investment Trust (WTAN)
Manager Andrew Bell says: “Managers’ fortunes tend to ebb and flow. We believe that if you invest in more than one, you can limit that ebb and flow. Also, we are a global fund and there is nothing to say that someone who is very good at investing in the Far East is any good at investing in the US. You need particular skills in particular geographies.”
Mr Bell meticulously scours the globe for the right managers. He has picked a range of managers that are focused stock pickers, agnostic on the index. He says: “We are blending relatively spicy ingredients in the hope of creating an interesting meal.” With that in mind, Witan’s underlying managers are generally not the well-known fund management names – they include Tweedy Browne, Matthews International or Marathon Asset Management.
The fund has about 40% invested in the UK and the remainder elsewhere. In general, Mr Bell leaves the geographic asset allocation to the underlying global managers, but he will act if he has strong conviction in a particular market, usually using derivatives such as equity index futuresto take exposure. A futures contract is an agreement between two parties for the sale of an asset at an agreed upon price.
Witan has a policy of growing its dividends and has delivered a higher payout every year since 1974. This remains a key priority for the trust’s managers.
A type of derivative often lumped together with options, but slightly different. The original derivative was a future used by farmers to set the price of their produce in advance before they sowed the seeds so that after the harvest, crops would be sold at the pre-agreed price no matter what the movements of the market. So a future is a contract to buy or sell a fixed quantity of a particular commodity, currency or security (share, bond) for delivery at a fixed date in the future for a fixed price. At the end of a futures contract, the holder is obliged to pay or receive the difference between the price set in the contract and the market price on the expiry date, which can generate massive profits or vast losses.