(Alliance News) - Alliance Trust PLC on Thursday said it underperformed against its benchmark in 2020, though it still increased its dividend for the 54th consecutive year.
The investor in global equities reported an 8.5% net asset value total return for 2020, while its benchmark, the MSCI All Country World Index, returned 13%.
Chair Gregor Stewart said this underperformance resulted from Alliance Trust's portfolio being underweight in larger companies, since it "has proportionately more capital invested in a broader range of stocks". He explained that the pandemic amplified concentration in large growth stocks, most notably in China and the US.
"It was encouraging to see the market begin to reduce its largest-cap concentration towards the end of 2020 as the news on vaccines began to have a positive impact on more cyclical companies and value stocks which have struggled for some years," Stewart added.
NAV per share rose to GBP9.34 basic and diluted, from GBP8.76 basic and GBP8.75 diluted in 2019.
The company declared a 14.38 pence per share dividend, up 3% from 2019, having now increased its ordinary dividend for the 54th consecutive year. It expects to continue year-on-year dividend increases going forward, and said it could continue paying an increasing dividend from revenue reserves along in the "extremely unlikely event" of its receiving no dividends from its portfolio for the next two years.
Chair Gregor Stewart said: "As the roll out of vaccines develops and the global economic recovery broadens out across industry sectors, your board and our investment manager remain confident that the company's diversified but high conviction portfolio is well placed to deliver long-term outperformance."
Further, Alliance Trust announced the immediate appointments of Sarah Bates and Dean Buckley as independent non-executive directors, while Senior Independent Director Karl Sternberg will stand down from the board on June 30. Bates will succeed Sternberg in this role.
Shares in Alliance Trust were down 1.0% at 885.00p in London on Thursday morning.
By Anna Farley; annafarley@alliancenews.com
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