Global investment trust Alliance Witan (LON:ALW) lagged the benchmark in the half to June 2026. The FTSE 100 fund’s relative performance fell below the board’s expectations.
Chairman Dean Buckley said the shortfall reflected a market in which returns were ‘unusually concentrated in AI-related stocks’. Unfortunately for shareholders, Alliance Witan’s deliberately diversified portfolio ‘did not participate in every area of momentum’.
While this short-term period of underperformance is disappointing, manager Willis Towers Watson (WTW) stressed that Alliance Witan’s portfolio has meaningful exposure to attractive AI‑related businesses.
Furthermore, the trust owns many companies with strong fundamentals whose value WTW believes has ‘yet to be fully recognised by the market’.
Why Alliance Witan underperformed
Alliance Witan generated a positive net asset value (NAV) total return of 7% for H1, and a total shareholder return of 6% as the NAV discount widened from 4.1% to 5.1%.
This was behind the 12.7% return from the MSCI All Country World Index. Relative performance was held back by the trust’s underweight exposure to technology and weaker stock selection in technology and financials.
This positioning proved unhelpful in a market where returns remained heavily concentrated among AI-related companies and supply chain beneficiaries.
Positive contributors included Flex (NASDAQ:FLEX), Murata Manufacturing (TYO:6981) and Samsung Electronics (KRX:005930).
The largest detractors included the fund’s underweights to the likes of Micron (NASDAQ:MU) and AMD (NASDAQ:AMD), alongside holdings in Salesforce (NYSE:CRM), SAP (ETR:SAP) and Mastercard (NYSE:MA).
Making the case for active management
Turning to Alliance Witan’s stock pickers, value-focused Lyrical and Japan/South Korea expert Dalton both added significant value. Jennison and Artisan were mildly positive, too.
But the other seven stock pickers, especially Brown, Vulcan and Veritas, detracted from relative performance.
Given Alliance Witan’s disappointing short-term performance, shareholders could be forgiven for wondering whether they wouldn’t be better off with a low-cost passive strategy instead.
However, Buckley argued the outlook for equities remains mixed and this uncertain environment only strengthens the case for active management.
He insisted: ‘When markets become highly concentrated, passive investors are forced to own more of what has already risen. Alliance Witan takes a different approach: shareholders gain access to a diversified group of expert stock pickers, each focused on identifying attractive long-term businesses, while WTW manages the overall balance of exposures. For investors seeking a core global equity holding with long-term growth and a rising dividend, we believe that remains a compelling proposition.’
Investors should also note that the board has reduced Alliance Witan’s fees in order to boost the trust’s competitiveness.
Global equity fund Alliance Witan aims to be a one-stop shop investment that beats inflation over the long term through a combination of capital growth and a rising dividend. An AIC ‘Dividend Hero’, Alliance Witan is on course to increase the annual dividend for the 60th successive year. That’s some achievement.
WTW blends the top stock selections of some of the world’s best active managers into a single diversified portfolio designed to outperform the market while carefully managing risk. Unfortunately, this super-diversified portfolio was at a disadvantage in a momentum-led H1.
The good news is the portfolio continues to offer broader exposure to high-quality businesses beyond the narrow AI trade. And neither the board nor WTW are dismissing the performance blip as simply a consequence of AI-driven market concentration.
It is reassuring to see WTW conducting a structured review of manager selection, portfolio construction and risk management. However, investors shouldn’t expect any radical changs to Alliance Witan’s diversified, high-conviction approach.
Learn more about Alliance Witan here: https://www.alliancewitan.com/
