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Monthly Factsheet

30 September 2015


Price: 458.2p NAV (inc Income): 523.2p Discount: 12.4%

Market & Portfolio Commentary

Market

Concerns over slower economic growth in China spread to other markets over the month. As a result global equities continued to be under pressure with the MSCI All Country World Index down 2.1% in Sterling terms in September and down 5.9% in the quarter. The US economy continues to grow but jobs growth, wages and persistently low inflation continue to undermine the Federal Reserve Bank’s ability to start raising interest rates. With no move in September, market expectations are now predicting that the timing of the first rate hike may be pushed out into Q1 2016.

Stock specific moves have, in many cases, been hugely volatile and resulted in significant divergence at the sector level. The best performers in September were Consumer Staples (+1.6%) and Utilities (+1.4) with the worst performers being Materials (-6.6%) and Energy (-6.1%).

Portfolio and performance update

The current market volatility is unsettling for many investors particularly those that focus on the short term. We view the recent moves as indicative of wider macro-economic concerns, particularly in some Emerging Markets. Our bottom-up stock-specific analysis has steered us away from many of these problem areas. As long-term investors, we still think there is value in global equities. Throughout this period of weakness we have taken the opportunity to top up some of our existing holdings at lower prices and look for opportunities at more compelling valuations. There have been no new positions in the equity portfolio.

We reduced gross gearing by £30m, which fell from 15.6% to 14.9%, funded by reducing our exposure to Fixed Income. The total net exposure to global equities was reduced from 100.7% to 99.6% of net assets. The net yield on the portfolio is 2.2%. The asset allocation mix is broadly unchanged over the month. On that measure it has outperformed over the month, quarter and the past year, when Simon and Peter took over the portfolio.

The discount narrowed over the month from 13% to 12.4% and following our announcement it has averaged just over 11%. Total Shareholder Return remains ahead of MSCI All Country World Index over 1, 3 and 5 years. NAV performance has significantly outperformed the index over the past year but as at the month end it lags the index over 3 and 5 years.

Outlook

The Trust’s global equity team continues to look for opportunities to invest in well-managed companies with strong sustainable fundamentals. This can only be achieved through greater understanding of how businesses operate and close links to management. Events of recent weeks emphasise how important it is to remain focused on the factors that drive stock specific returns over a three to five year time horizon. We remain convinced that our investment process and portfolio are well positioned to deliver what our shareholders expect – increasing the value of their investments through capital growth and a rising dividend. Additionally our announced changes are consistent with that and our belief that they will enhance shareholder value.

Board Announcement

On 1 October, the Board of Alliance Trust PLC announced that it was implementing changes to enhance shareholder value. The changes mean that the Trust will focus on global equities and dispose of noncore investments and award the investment mandate to Alliance Trust Investments (ATI) at a rate of 0.35% on average NAV. The Board will target an Ongoing Charges Ratio of 0.45% or less by the end of 2016, as a consequence of, in part, a significant cost reduction programme delivering savings of £6m for 2016. In addition, the MSCI All Country World Index will be recognised as the benchmark. The Board committed to narrowing the discount to NAV to single digits and to continue its focus on delivery of progressive dividends as ordinary dividends. It will also simplify the structure of the organisation and introduce a fully independent Board for the Trust and for both ATI and Alliance Trust Savings (ATS) to increase focus and accountability.

Asset Allocation


Assets
% of Net Assets
Net Equity Exposure
99.6
Fixed Income
4.9
Private Equity
4.6
Operating Subsidiaries
2.1
Property
0.2
Cash & Other Net Assets
3.5
Gross Assets
114.9
Gearing
(14.9)
Net Assets Inc Income
100.0
Source: Alliance Trust

Key Information


Market Capital:
£2,530.8m
Total Assets:
£3,315.0m
Net Assets:
£2,885.0m
Total Borrowings:
£430.0m
Ongoing Charges Ratio (year to December 2014):
0.60%
Net Yield:
2.2%
Year End:
31 December
Date of Incorporation:
21 April 1888
Dividend Paid:
April, June, September, December
Issued Share Capital:
552,334,146

Performance

Cumulative Performance

To 30 September 2015
One Month
Six Months
One Year
Three Years
Five Years
Total Shareholder Return
-1.8
-8.7
3.9
33.3
57.6
NAV Total Return
-2.5
-9.8
3.5
27.9
42.4
Equity portfolio gross return*
-1.5
-9.9
3.1
29.1
N/A
MSCI ACWI Total Return (£)
-2.1
-10.7
0.4
32.5
48.6

Cumulative Returns

Source: FactSet and Morningstar

Discrete Performance – Total Return (%)

12 Months to 30 September
2015
2014
2013
2012
2011
Total Shareholder Return
3.9
9.0
17.8
18.0
0.3
NAV Total Return
3.5
7.2
15.3
18.0
-5.6
Equity portfolio gross return*
3.1
7.6
16.4
N/A
N/A
MSCI ACWI Total Return (£)
0.4
11.8
18.0
17.4
-4.4
Source: FactSet and Morningstar
* The equity portfolio was restructured in December 2011 and equity portfolio returns prior to December 2012 are not comparable.

Alliance Trust Discount

Alliance Trust Discount
Source: Factset and Morningstar

Regional Allocation & Revenue (%)†

Regional Allocation & Revenue
Source: Alliance Trust and FactSet

  • Geographic weight is based on the region in which the company is listed.

  • Revenue split analyses the segmental reporting of revenue by the companies in which Alliance Trust invests.

  • Analysis excludes segmental non-specific income such as “Rest of the World” (16.5%) as the definition varies from company to company.

Regional Allocation Breakdown (%)† *

Regional Allocation Breakdown
Source: Alliance Trust and FactSet

Sector Allocation (%)†

Sector Allocation
Source: Alliance Trust
† Weightings are calculated on a look-through basis whereby the Trust's exposure is combined with that of its holdings in Alliance Trust Investments' funds in order to calculate total exposure.
* All countries with exposure of greater than 0.05% shown.

12 month equity portfolio performance attribution


 
Equity portfolio
MSCI ACWI (£)
     
Sector
Average Weight
Total Return
Average Weight
Index Total Return
Sector Allocation Effect
Stock Selection Effect
Total Effect
Consumer Discretionary
7.8
23.6
12.2
12.6
-0.5
0.7
0.1
Consumer Staples
8.4
11.6
9.8
10.5
-0.1
0.1
0.0
Energy
5.7
-32.0
7.7
-28.7
0.7
-0.3
0.3
Financials
25.8
0.8
21.4
-1.0
-0.1
0.5
0.4
Health Care
17.1
11.9
12.0
9.9
0.5
0.3
0.8
Industrials
7.9
0.0
10.5
-0.7
0.0
0.1
0.1
Information Technology
17.4
9.4
13.7
6.3
0.2
0.6
0.8
Materials
4.4
-15.5
5.2
-18.3
0.2
0.1
0.2
Telecom Services
1.7
6.0
3.7
-1.4
0.0
0.1
0.2
Utilities
3.8
-2.1
3.2
1.1
-0.1
-0.2
-0.2
Total
100.00
3.1
100.0
0.4
0.7
1.9
2.6
Source: Factset and Morningstar
Performance attribution is calculated over 12 months to 30 September 2015.

Top 20 Equity Investments†


Rank
Name
£m
% Quoted equities
1 Visa
103.3
3.6
2 Pfizer
96.7
3.4
3 Walt Disney
88.1
3.1
4 CVS Caremark
85.1
3.0
5 Accenture
83.2
2.9
6 Prudential
81.4
2.8
7 Wells Fargo
71.1
2.5
8 National Grid
65.5
2.3
9 Intesa Sanpaolo
60.8
2.1
10 Blackstone
60.3
2.1
11 Legal & General
58.7
2.0
12 Amgen
54.7
1.9
13 Sanofi
54.5
1.9
14 American Tower
53.2
1.9
15 Reckitt Benckiser
52.2
1.8
16 Vodafone
50.4
1.8
17 Swedbank
50.3
1.8
18 HSBC
50.0
1.7
19 TJX Companies
48.8
1.7
20 Danaher
48.4
1.7
Source: Alliance Trust

The top 10 holdings currently make up 27.8% of net assets.
The top 20 holdings currently make up 46.0% of net assets.

Full Portfolio Breakdown

A full breakdown of the Trust's portfolio can be viewed here

Key Trades

Largest new holdings
None
No Longer Held
None
Source: Alliance Trust

Contact


Evan Bruce-Gardyne

Evan Bruce-Gardyne

Director of Investor Relations
Alliance Trust PLC,
8 West Marketgait
Dundee DD1 1QN

Tel +44 (0)1382 321169
Fax +44 (0)1382 321185

Contact us here

Objective


Alliance Trust is a self-managed investment company with investment trust status. Our objective is to be a core investment for investors seeking increasing value over the long term. We have no fixed asset allocation benchmark and we invest in a wide range of asset classes throughout the world to achieve our objective.

Our focus is to generate a real return for shareholders over the medium to long term by a combination of capital growth and a rising dividend.

Risk Warning


Your capital is at risk. You may not get back the full amount you invested. Full risk warnings can be found in the Important Information Section below.

There may be words or phrases you are not familiar with. Speak to your stock broker or financial adviser if you need further explanation.

Important Information


Alliance Trust PLC is a self-managed investment trust company, operating from 8 West Marketgait in Dundee.

The views, information and data in this publication should not be deemed as a financial promotion or recommendation. Alliance Trust PLC is not authorised to give financial advice.

Please remember past performance is not a guide to future performance. You may not get back the amount you invest. The value of your investment, and any income from it, may fall as well as increase.

For security and compliance monitoring purposes, telephone calls may be recorded.

Exchange rate changes may cause the value of overseas investments to go down as well as up.

Investment trusts may borrow to finance further investment (gearing). The use of gearing is likely to lead to volatility in the Net Asset Value (NAV) meaning that a relatively small movement, down or up, in the value of a trust’s assets will result in a magnified movement, in the same direction, of that NAV. This may mean that you could get back nothing at all.
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