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Witan is wary of over-reacting to market volatility

Witan says it may review the underlying managers in its multi-manager portfolio in the new year but is wary of making any kneejerk reactions to volatility.

The manager says it is continuing to follow an active equity management approach within the portfolio and has cut exposure to its UK enhanced index tracker.

In May, the investment trust appointed Artemis and Marathon Asset Manage- ment to run part of its assets to capitalise on alpha opportunities following a strategic review by the board.

The Artemis holding is a segregated mirror of Derek Stuart’s UK special situations fund which seeks to exploit market inefficiencies with an absolute return strategy.

London-based Marathon employs a contrarian capital cycle investment approach and generally takes a long-term view on holdings.

European boutique manager Varenne Capital Partners was also brought on board by Witan in April to manage 3 per cent of its portfolio through a concentrated portfolio of 10 to 15 stocks.

Witan employs a benchmark of 40 per cent UK exposure and 20 per cent exposure in North America, Europe and the Far East. It remains underweight in the UK, overweight in the US and in line with Europe and the Far East.

Since being appointed to the portfolio in September 2004, Southeastern and Wellington Management are behind their benchmarks by -3.4 and -4.2 per cent annualised respectively. Despite outperforming their benchmarks by 1.5 and 2.1 per cent respectively over the last quarter, both US managers are lagging in the fourth quartile and were recently subject to a watching brief following a reshuffle in senior management.

Witan marketing director James Frost says question marks over the managers’ historic underperformance have been resolved in the short term and no changes are planned.

He says: “Whether there will be a few changes in the new year, we will have to wait and see. It is likely, given the volatility of markets, but any change has to be well thought out and the new team are wary about making any kneejerk reactions.”


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