Alliance Trust pours £35 million into ‘compelling’ Europe opportunity

Alliance Trust has made significant investments into Europe and US technology firms over the last three months as the restructure of the £2.6 billion portfolio continues at pace.  

‘We have increased our exposure to North America, while reducing our exposure to Asia. We allocated £35 million to Europe in late September as we believe that the valuations for many companies are now looking increasingly compelling,’ the investment company said in its interim update covering the three months to the end of September.

Alliance is the latest to see a bargain opportunity in Europe after Wealth Manager revealed earlier this week that Jupiter chief investment officer John Chatfeild-Roberts had recycled his cash position into the Continent.

The investments have had a significant impact on the make-up of the trust's top 20 holdings.

‘The effect of the changes can be seen in the change to our top 20 stocks. Six of the 10 largest purchases were of US listed stocks, with over £83 million invested in technology companies during the period,' Alliance explained. 'Seven of the companies in the top 20 are new to the list since the end of June and half the companies in the top 10 are listed outside the UK adhering to our renewed strategy to invest in global equities.’

To cater for this shift, Alliance increased its exposure to tech giants Qualcomm and Samsung, which was funded by selling down telecoms firms such as Vodafone and industrials like Caterpillar and Tetra Tech, along with material holdings in Elementis and Yamana Gold.

The portfolio's reconstruction is the next in the step in the new equity management approach announced by the trust’s chief executive Katherine Garrett-Cox (pictured) on 5 July after it survived two successive attacks from activist investor Laxey Partners.

The move is designed to return the trust’s core focus to global equities and fixed income, led by Ilario Di Bon, who was appointed to the new role of equity head to facilitate this process.

The trust’s net asset value grew by 3.3% over the quarter and it ended the period on a 15.1% discount.

With plenty of uncertainty remaining in markets Alliance continues to adopt a cautious approach.