Witan (WTAN), the global ‘multi-manager’ investment trust, has begun to back the next generation of fund managers with a new mandate to boutique Latitude Investment Management.
The investment represents the first in a new category under which Witan chief executive Andrew Bell and investment director James Hart can invest up to 2.5% of their £1.9 billion portfolio in up-and-coming fund managers.
Bell and Hart are allocating around 0.7% of Witan, or between £10 million and £15 million, to Latitude, which was founded by global stock picker Freddie Lait (pictured) in 2016. Lait who formerly managed the Odey Atlas fund, received backing from Odey Asset Management to launch the business and took the fund with him, which has since been renamed the Latitude Horizon fund.
The fund targets lower volatility and takes a high conviction approach. It currently allocates around 45% to equities, with the remainder in other asset classes. Latitude Horizon has returned 4.7% over the 12 months to the end of March, which compares to 1.7% by the average fund in the flexible sector.
The Witan mandate will be based on the global equity portion of the Latitude Horizon fund but won’t be an exact mirror, Hart said.
Hart added that the allocation does not reflect a desire to increase global equity exposure, but rather is a way to get exposure to a fund manager at an exciting stage in their career.
'One of the reasons we started thinking about this is because there are a number of managers – around London, the UK and the rest of the world – who are at a similar stage in their development but are quite far below the radar. It is not easy to find really talented people who have not hit the headlines,' Hart (pictured) explained.
The new position will sit in Witan’s ‘direct holdings’ allocation, which has been the best performing part of its £1.9 billion portfolio in the past two years. It is anticipated that the new allocation to rising stars will be spread across two to five managers.
‘This is no compulsion for us to use this, but it is an opportunity for us to take advantage of investing with managers who are newly established or not well known at this stage,’ Hart said.
The team is willing to invest in managers who may not have a long track record or have recently set up their own business where they are impressed with their process and intellectual rigour.
Witan’s existing global equity exposure comprises of mandates run by Lansdowne Partners, Pzena and Veritas. Last year, the team reduced the number of global managers in the portfolio from five to three , after selling out of MFS and Tweedy.
Over the past five years, Witan's share price has risen by 94.8%. This compares to a 125% increase by the average fund in the Association of Investment Companies' global sector.
Witan currently trades at a 1.2% discount to net asset value, which compares to an average discount of 1.4% across the global sector.