Craig Baker, global chief investment officer at Willis Towers Watson, shows how the multi-manager approach at Alliance Trust (ATST ) has enabled it to beat the MSCI All Countries World index over the past six years. It has done particularly well in the past three.

This is the third video from our virtual event with Alliance Trust last week. If this whets your appetite, watch the whole Big Broadcast here.

Can’t watch now? Read the transcript

Craig Baker:

We’ve shown performance to the end of May here and since inception is from the date that we started managing the portfolio on 1 April 2017. So, six years and two months in this particular case. I guess the first thing to note is that we’ve actually outperformed all three objectives of index, the investment trust peer group and the wider peer group – that includes open-ended funds as well as closed-ended funds. We’ve beaten all three of those over every single period since we’ve been running this portfolio. What you’ll see there is over the last three years it’s been a very strong period of performance, outperforming the index by 1.3% per annum over the three years to the end of May, the investment trust peer group by nearly 5% per annum over that three-year period, and the wider peer group by some 3% per annum.

Since inception over that full six-year period, it’s been a tougher time for active management generally. You’ll see we’ve outperformed the benchmark but by less – by 0.3% per annum over that period. The MSCI All-Country World index has actually been one of the best-performing indices over that full six-year period because it’s been driven by a small number of very large tech companies that are a very high proportion of the index. Despite that headwind to active management, it still outperformed by 0.3% per annum.

You’ll see we’ve outperformed the investment trust peer group over that period by 0.4% per annum, which may not seem that high but, interestingly, if you actually look at the fact that over that six-and-a-bit years, a few of the worst-performing investment trusts have just fallen out of that universe, either because they’ve been reclassified or they’ve been taken over because of poor performance. This inflates the return from the average investment trust. If you allow for who was in the universe in every quarter over that full six-year period, we’ve actually outperformed by 2.2% per annum over those six years or so.