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Value managers pay off as Witan beats benchmark

Recent outperformance of the Witan investment trust relative to its benchmark has been attributed to a combination of a multi-manager
approach, the reintroduction of gearing and a commitment to share buybacks.

Unaudited results for the 12 months to the end of December 2009 show the trust beat its composite benchmark, comprising the FTSE all-share, FTSE all-world North America, FTSE all-world Europe (ex UK) and FTSE all-world Asia Pacific indices by 1.4 per cent. A 26.7 per cent share price rise, plus dividend payments, represented a 30.6 per cent return to investors over the period.

Witan says it has used share buybacks to manage the trust’s discount to net asset value, and singles out underlying managers Wel lington, Southeastern and Orbis as last year’s key performers. It says the value investment styles of Wellington and Southeastern had been out of favour but came good last year. An Australian mandate run by Orbis in Sydney also did well.

Witan increased dividends for the 35th consecutive year, which it says is important as many of its investors rely on income. On April 1, the trust will pay investors a second interim dividend of 6.2p a share for 2009, representing a 2.9 per cent increase over 2008.

The trust benefited from around half its equity mandates outperforming relative to 75 per cent of active managers underperforming. Witan believes its multi-manager approach enabled the trust to react quickly to last year’s fast-moving markets. Deploying 6 per cent gearing when the markets bottomed in February also contributed.

Marketing director James Frost says: “We reined in gearing two to three years ago and use it tactically. We have the ability to gear above 6 per cent but Witan is a safe and steady trust, so it will never be highly geared.

“What is pleasing to note is that Wellington and Southeastern have not been top of the shop for us historically but we stuck with them and have been repaid.”

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