Alliance Trust underperforms in first half, gives cautious outlook

Alliance Trust Savings’ assets under administration rose by £800m to £7.2bn, although higher marketing costs ahead of ISA season and the acquisition of Stocktrade meant that the business produced an operating loss of £1.1m. Elliott had pressed for three new directors to change AT’s investment strategy and boost performance.

Alliance Trust reported a net asset value (NAV) total return of 1.4 per cent during the six months to June 30 and total shareholder return of 2.7 per cent.

Disappointing portfolio returns had been adversely affected by weakness in some income holdings.

“The first half of 2015 was a particularly challenging period for Alliance Trust”, she said.

“The board has listened to these concerns and is actively engaged in addressing them” she said, adding that more changes will be announced in the Autumn.

Nonetheless, Garrett-Cox will know excuses won’t fly with Elliott and the other investors it recruited to its cause during the bitter war of words, which ended with two non-executive directors of its choice joining Alliance’s board.

Alliance Trust Plc Chief Executive Officer Katherine Garrett-Cox said the Scottish money manager will implement “changes” after meeting with shareholders in the aftermath of its public battle with Elliott Advisors. “While the results for this specific period were disappointing, it should be noted that since the equity team took over responsibility for the portfolio in September 2014, the equity portfolio has outperformed its MSCI All Country World Index benchmark”. The group is overweight in financials, IT and healthcare while holding lower-than-average stakes in consumer goods and industrials.

“Our objective is to maximise shareholder value by delivering a combination of long-term capital growth and a consistently rising dividend”, she said.

Shares closed up 0.24% at 495p.