Witan, the 103-year-old investment trust, confessed to a disappointing showing in 2011 as its net asset value (NAV) per ordinary share dipped and performance lagged behind the trust's benchmark index.
NAV per ordinary share on a debt at par value fell 11.6% from 584.4p to 516.9p, while on a fair value basis it dropped 12.9% from 578.1p to 503.7p. The shares currently trade around the 500p mark.
Discount at par value was 12.9% compared to 11.6% the previous year. Share buy-backs fell from 4% to 1.5%, while the number of private investors dropped from 36,595 to 33,421. Total shareholder return was -10.7% for the year, under-performing Witan's benchmark index by 3.9 percentage points. The group said the under-performance was down to three main factors:
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1) The group was adversely exposed to the very steep drop in markets in the first few days of August.
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2) Its portfolios were not in aggregate positioned for the abrupt change in investor risk aversion in the market sell-off.
3) The quoted value of its debt securities increased, since they tend to be traded by reference to UK gilt-edged securities which rose in value. This led to a fall in the value of its net asset value when calculated using the market value of our debt.
As ever, investment trusts prefer to focus on the longer term picture, and Witan noted that shareholder return for the past three years has been 38.8%, and 12% for the past five.
The firm said that one notable positive feature of 2011 was the strong growth in revenue from dividends. Witan's own dividend has been raised to 12p from 10.9p in 2010, with the final dividend for the reporting period being nudged up to 6.55p from 6.55p the year before.
The board is cautiously optimistic about the current year and said: "Considerably more caution is built into market expectations than at this time last year. Consequently, if growth outside Europe proves more resilient than expected and the most disruptive outcomes for the Eurozone crisis can be averted, equity markets should be able to recover from what currently appear to be low valuation ratings. Such a return to more rational investment conditions is likely to favour Witan's fundamental multi-manager investment approach."
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