ALLIANCE WITAN 2025: PERFORMANCE, DRIVERS, AND 2026 OUTLOOK

How did Alliance Witan (ALW) shares perform in 2025?

Alliance Witan Investment Trust (LSE: ALW), one of the UK’s most established multi-manager investment trusts, experienced a year of mixed performance in 2025, shaped by macroeconomic conditions, sector rotation, and internal strategic positioning. As global equity markets showed signs of recovery from past inflationary pressures and geopolitical tensions, ALW’s diversified portfolio delivered returns largely aligned with its peers, though final performance varied across asset classes and geographical allocations.

By year-end 2025, ALW shares recorded a modest annual total return of approximately 7.4%, with the share price rising from around 250p at the start of the year to nearly 268p. The trust’s discount to net asset value (NAV) remained in the 6–9% range, signalling moderate investor sentiment amid broader market recovery. Net assets increased, driven by resilient performance in U.S. and global technology-focused mandates. Dividend yield was maintained at a competitive 2.5%, aligning with its historic income distribution policy.

Notably, the trust’s performance in the second half of 2025 outpaced the first half, reflecting improved global confidence following clearer central bank signals regarding interest rate trajectories. Additionally, UK domestic equities, to which ALW holds modest exposure via select managers, saw tailwinds from weakening inflation and a stabilising pound sterling.

Quarterly Performance Highlights

• Q1 2025: ALW began the year on a cautious footing, influenced by fears of lingering inflation and slowdowns in Europe. The trust posted a minor loss of 0.8% in the first quarter.
• Q2 2025: A rebound in global equities and early signals from the Bank of England on controlled rates resulted in 3% total return.
• Q3 2025: Moderating inflation and rising tech-sector optimism, especially in AI-related holdings, led to a 2.5% quarterly gain.
• Q4 2025: Year-end momentum with renewed M&A activities and improved consumer data pushed another 2.7% return.

Sector and Geographic Allocation in 2025

ALW's continued commitment to a multi-manager model meant its exposure was split across leading global investment firms. The heaviest weightings were towards:

• North America (45%) – Primary driver of returns, especially through tech and healthcare exposure.
• Europe ex-UK (25%) – Mixed outcomes, with luxury goods and energy sectors balancing underperformance in financials.
• UK (15%) – Defensive stocks and utilities performed better than cyclical shares.
• Asia-Pacific & Emerging Markets (15%) – Higher volatility; outperformance in select India-focused mandates.

Overall, ALW remained consistent with its global equity strategy, maintaining its focus on delivering both capital and dividend growth through its external manager partnerships. The trust’s governance and low-fee structure continued to appeal to cost-conscious investors.

What were the key drivers and milestones for ALW in 2025?

Alliance Witan’s investment performance in 2025 was underpinned by several macro and micro-level factors. These drivers significantly shaped investor sentiment, portfolio composition, and ultimately, the trust’s NAV and share price trajectory.

1. Global Monetary Policy Shifts

The most critical macroeconomic influence was a clearer direction from the Bank of England and the U.S. Federal Reserve on interest rates. As inflation showed sustained signs of contraction mid-year, ALW benefited from broader equity market rallies. The shift in forward guidance from central banks encouraged a rotation back into growth and technology stocks, particularly within its North American holdings.

2. Manager Selection and Thematic Allocations

As a multi-manager fund, ALW closely monitors performance across underlying asset managers. Its continued reliance on high-performing fund houses such as Lindsell Train and GQG Partners ensured resilience. Themes gaining traction in 2025 included:

• Artificial Intelligence and big data analytics
• Energy transition and renewables
• Healthcare innovation
• Asia’s digital consumer sector

Smart allocations in these areas helped shield the portfolio from underperformance in sectors exposed to geopolitical instability or interest rate sensitivity.

3. Mid-Year Portfolio Rebalancing

In June 2025, ALW announced minor reallocations, reducing exposure to underperforming European financial equities and modestly increasing its investment in U.S. technology disruptors. This tactful adjustment supported stronger second-half performance. The trust also enhanced its ESG compliance reporting, aligning with incoming sustainability disclosure regulations within the UK and EU frameworks.

4. Dividend Stability & Income Growth

Sticking to its commitment of consistent income returns, ALW paid out two interim dividends and a final dividend that matched previous guidance. This offered welcomed stability to income-seeking investors amid market volatility.

5. Governance and Board Developments

2025 marked the appointment of two non-executive directors with extensive experience in global portfolio oversight and ESG strategy. Their addition aimed at strengthening board oversight and stewarding the trust’s evolving role in a dynamic investment landscape.

6. Performance Metrics & Comparisons

Compared to other UK-listed global equity trusts like Scottish Mortgage and F&C Investment Trust, ALW’s performance was respectable though more conservative. Investors seeking lower volatility found its strategy a compelling blend of risk management and progressive allocation.

Key Milestones Achieved

• Increased NAV by over £120 million during FY2025
• Portfolio allocation refresh prioritising future-focused sectors
• Strengthened ESG compliance reporting ahead of regulation timelines

ALW’s forward-looking approach appeared to position it well for the challenges and opportunities expected in 2026.

What are the key risks and what to watch for ALW in 2026?

Looking ahead to 2026, Alliance Witan faces several strategic and market-driven challenges alongside opportunities for growth. Investors would be prudent to monitor both macroeconomic headwinds and trust-specific developments that may affect share performance and dividend consistency.

1. Global Economic Uncertainty

2026 begins with uncertainty around the pace and timing of interest rate cuts. If inflation resurges, central banks may revert to hawkish stances. ALW, with considerable exposure to growth and international equities, could be vulnerable to downward market revisions or risk-off sentiment.

2. Currency Volatility

A significant proportion of ALW’s portfolio is denominated in U.S. dollars, euros, and other non-sterling currencies. Any sharp movements in FX rates, particularly a weakening pound on the back of delayed Bank of England action, could impact valuation in sterling terms — both positively and negatively.

3. Manager Underperformance

While ALW spreads its risk across multiple specialist fund managers, underperformance from one or more could drag on the trust’s returns. Investors should watch for any redemptions, fee increases, or changes in management that could affect portfolio dynamics in 2026.

4. Regulatory Changes

2026 will see expanded ESG disclosure requirements as the UK integrates new standards consistent with the EU’s SFDR and global sustainability frameworks. ALW will face pressure to maintain transparency and compliance, demanding further internal resources and possibly influencing manager selection criteria.

5. Geopolitical Risks

The global landscape remains volatile, with potential flashpoints including continued Russia-Ukraine tensions, South China Sea disputes, and general election cycles in the UK and U.S. In such an environment, defensive holdings and geographic diversification remain critical, yet heightened volatility could affect discount levels and investor flows.

6. Dividend Sustainability

Investors looking for steady income must watch how ALW navigates yield pressures if portfolio rebalancing continues in favour of high-growth sectors over income-generating holdings like UK utilities or telecoms. Any change in dividend guidance would influence institutional and retail positioning alike.

Positive Catalysts to Watch

• Acceleration in global interest rate cuts — a boost to growth equities
• Continued AI and digital transformation trends globally
• Potential narrowing of share price discount to NAV
• Enhanced governance credibility post-2025 executive additions

Consensus Outlook

Analysts covering UK investment trusts maintain a cautious but constructive stance on ALW for 2026. It is broadly viewed as a relatively defensive play within the global equities space, with strong governance and moderate volatility. Investors are encouraged to remain attuned to macroeconomic signals, FX movements, and any shifts in portfolio manager mandates that may influence short-term performance.

As ever, diversification and income resilience make ALW a valuable component in balanced portfolios, though it may underperform in strongly bullish cycles if investors favour more aggressive or concentrated strategies elsewhere.