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Alliance Trust Savings returns to profit

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Alliance Trust Savings has returned to profit with a £1.2m profit last year compared with a £5.2m loss for 2015.

Assets under administration for the firm rose by 60 per cent to £13.6bn in 2016, with a 31 per cent increase in the number of accounts.

The firm said the main driver for growth came from the completion of the Stocktrade acquisition as well as the re-platforming, which are seen “as important in growing the profitability of the business”.

Alliance Trust Savings chief executive Patrick Mill says: “We have a number of strengths in the platform market including one of the broadest investment ranges, a banking licence, the backing of a strong parent, independent of banks and life company product providers and a diversity of distribution channels incorporating direct, intermediary and partnerships. And, with our simple flat fee structure we are the truly fair option for customers.

“Over the last year, the completion of the acquisition of Stocktrade and the investment in technology have been a key focus. In 2017, our new platform will open to new intermediary business, followed by the migration of existing intermediary clients. This technology will then be implemented in the direct channel along with a new and enhanced proposition, leaving us well-positioned to accelerate growth across all three distribution channels.”

Overall, Alliance Trust has improved returns for its shareholders but reported underperformance versus the benchmark in 2016 as it reveals a new investment strategy.

In its full year results, the firm says total shareholder return for the period was 26.4 per cent mostly helped by a narrowing discount, compared to returns of 10.7 per cent in 2015.

The discount to NAV narrowed to 4.4 per cent, down from with 8.1 per cent at the end of 2015 thanks to an “active programme” of share buybacks from the firm.

However, the firm reported net asset value return of 21.5 per cent for 2016, compared to 29.4 per cent return from its benchmark MSCI All Country World Index.

Ordinary dividend for 2016 is 12.774p, which is an increase of 16.4 per cent compared with 2015 when dividend was 10.97p, the firm says.

As part of a new investment strategy, the firm has appointed Willis Towers Watson following the sale of its in house investment management arm to Liontrust Asset Management last year, which is expected to bring over £5m to the firm.

WTW, which will receive the company’s equity portfolio by the end of April, will adopt a multi-manager approach, with five North American and three London-based managers to run the portfolio.

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