Witan Investment Trust Plc
Annual Financial Report for the year ended 31 December 2019
Chairman's Report
HIGHLIGHTS
- NAV total return of 21.3%, outperforming the benchmark's return of 20.3% by 1.0%
- Five-year NAV total return of 73.0%, compared with 64.9% for the benchmark
- Share price discount to NAV 0.7% at year-end (2018: 1.3%)
- Dividend increased by 13.8% to 5.35 pence, more than double that paid in 2009 and an unbroken run of increases since 1974
- Benchmark simplified and made more global from 2020
- Increased emphasis on sustainability; Witan is a signatory to the UN-supported Principles for Responsible Investment.
Witan has invested with a multi-manager approach since 2004. Over this period, we have beaten the returns on our equity benchmark and raised the dividend significantly faster than the rate of inflation.
In 2019 US growth was resilient and at a higher level than other developed markets, where expectations continued to be downgraded. With evidence of weakening corporate confidence, there were concerns mid-year that the US trade dispute with China would spin out of control and precipitate a more pronounced slowdown, or even a recession. In Europe and the UK, sentiment was held back by the unpredictability of the Brexit process and by Germany's exposure to a weakening Chinese economy and a stalling car sector. The global slowdown was ultimately arrested by policy changes (renewed monetary easing by the US Federal Reserve and other central banks and a shift towards looser fiscal policy) and positive political developments (a tentative US trade deal with China and an unexpectedly clear-cut resolution of the UK's domestic political impasse).
Despite the various crosswinds, equity markets delivered strong gains in 2019. One reason was the weak starting point. 2018 ended with a sharp equity correction, which discounted some of the risks that became more evident in 2019. This fall was quickly reversed in the early months of 2019, followed by a period of consolidation during the middle of the year, when fears of a possible recession took hold. Markets gained further towards the year end due to reduced political risks and improving hopes for growth in 2020.
Witan shareholders enjoyed exceptionally strong returns in 2019, which were ahead of our benchmark, although patience was required. For much of the year, Witan's gains were behind those of our benchmark, owing to relatively high weightings in the UK and exposure to more lowly-valued but out of favour stocks. However, both these factors proved beneficial towards the end of the year, resulting in a net asset value ('NAV') total return of 21.3%, 1.0% ahead of our benchmark's total return of 20.3%. The share price total return was 22.1%.
Taking a longer perspective, over the past five years Witan has achieved a NAV total return of 73.0%, compared with the benchmark's 64.9% return over this period. During the ten years to the end of 2019, shareholders have had a NAV total return of 192.0%, compared with the benchmark's return of 154.7%.