Alliance Trust sees NAV rise in Q3

Investment company Alliance Trust grew its net asset value (NAV) in the third quarter by three per cent, delivering a total return of 5.7 per cent, despite fragile global economic conditions.

The funds focus is to generate a real return for shareholders over the medium to long term by a combination of capital growth and a rising dividend.

NAV per share including income stood at 436p at the period end, up 3.0%, with share price appreciation the total return was boosted to 5.7%.

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During the three months to September 30th, the cum income discount traded in a tight range between 15.1% and 16.9% and finished the period at 15.1%. There were no buy backs during the period and the discount volatility was low.

Alliance Trust, which has been under pressure to reduce the discount to NAV by activist investor Laxey Partners and has rearranged its investment portfolio to boost returns.

The portfolio saw significant change over the period as it moved to restructure the way in which it manages its assets. The number of direct equity holdings has reduced from around 200 to just over 110 and once the process is complete, its target is to hold less than 100 equities, which will allow the portfolio to benefit from the higher levels of conviction.

It has also increased its exposure to North America, while reducing exposure to Asia. It also allocated £35m to Europe in late September as it believes valuations for many companies "are now looking increasingly compelling".

At the sector level, the biggest move was to increase its exposure to information technology (through increasing positions in Qualcomm and Samsung), which has been funded in part by selling down telecoms (reducing its position in Vodafone), industrials (Caterpillar and Tetra Tech) and material holdings (Elementis and Yamana Gold).

CM