Alliance Witan targets 60th dividend rise despite AI-driven underperformance

Alliance Witan PLC delivered positive returns during the first half of 2026, but the investment trust's diversified approach struggled to keep pace with a market increasingly driven by artificial intelligence stocks.

Net asset value, or NAV, produced a total return of 7.0% over the six months to 30 June 2026. That was well behind the 12.7% return from the MSCI All Country World Index, the trust's benchmark.

The board described the relative performance as below expectations and has backed a structured review of the investment strategy. However, there is no major change currently expected to Alliance Witan's diversified, high-conviction approach.

Alongside that performance disappointment, the trust has raised its first two interim dividends by 3.5%, reduced management fees and stepped up share buybacks.

Alliance Witan's key half-year figures

Metric	30 June 2026	31 December 2025 or comparator
Share price	1,344.0p	1,282.0p
NAV per share	1,416.5p	1,337.2p
NAV total return	7.0%	MSCI ACWI: 12.7%
Share price total return	6.0%	Not applicable
Discount to NAV	5.1%	4.1%
First two interim dividends	14.66p	14.16p in 2025
Net assets	£5.28 billion	£5.11 billion

NAV is the value of the trust's assets after subtracting its liabilities. The discount shows how far the share price sits below that underlying NAV per share.

Alliance Witan's share price rose 4.8% during the period, while NAV per share increased by 5.9%. Including dividends, the shareholder total return was 6.0%.

Why Alliance Witan lagged the benchmark

The main issue was not an absolute loss. It was the size of the gap against the benchmark.

Technology underweights were the largest drag on relative performance. Stock selection within technology and financials also detracted.

Alliance Witan had exposure to several strong performers, including Flex, Murata Manufacturing, Samsung Electronics and Taiwan Semiconductor. However, this was more than offset by being underweight or not owning other major beneficiaries of the AI boom.

Micron Technology rose 310.0%, Advanced Micro Devices gained 174.9% and Intel advanced 283.5% during the period. Alliance Witan's underweight positions in these shares reduced relative returns.

The attribution figures show the scale of the challenge:

Contribution to return	Percentage points
Benchmark total return	12.7%
Asset allocation	-1.1%
Stock selection	-4.8%
Gearing and cash	0.4%
Investment manager impact	-5.5%
Fees and expenses	-0.3%
NAV total return	7.0%

This is the tension at the centre of the results. Diversification can help manage risk over the long term, but it can also be costly when market gains are concentrated in a relatively narrow group of stocks.

The investment strategy is under review

The board has continued to challenge investment manager WTW and engage with the trust's underlying Stock Pickers. These are the active managers responsible for selecting concentrated groups of shares for the portfolio.

WTW is now carrying out a structured review covering:

• Stock Picker selection
• Individual stock selection
• Portfolio construction
• Risk management

The trust has already added a second risk model and adjusted the allocation of capital between managers. During the second quarter, 5% of the portfolio was moved from Veritas, Metropolis and Brown to Jennison, Sands and Dalton.

Management described this as a portfolio-construction decision rather than a change in investment philosophy.

That distinction matters. Alliance Witan is not abandoning its multi-manager model or turning into an AI momentum portfolio. Instead, it is examining whether the blend of managers and exposures can be improved.

Investors will need to watch whether this review produces measurable changes and, ultimately, better relative returns. The board has classified investment performance risk as increasing, which is a candid acknowledgement of the issue.

A 60th consecutive dividend increase is in sight

The second interim dividend is 7.33p per share, compared with 7.08p for the equivalent 2025 payment.

Together, the first two interim dividends for 2026 total 14.66p per share, up 3.5% from 14.16p last year.

Barring unforeseen circumstances, the third and fourth payments are expected to be at least 7.33p each. That would produce a full-year dividend of at least 29.32p per share and mark the trust's 60th consecutive annual increase.

At the 30 June share price of 1,344p, that prospective payment represented a 2.2% dividend yield.

The dividend is supported by £5.2 billion of distributable reserves. That substantial reserve position gives the trust flexibility to maintain payments through periods when portfolio income is less supportive, although future dividends are never guaranteed.

The potential 60th increase follows the trust's 59th consecutive dividend rise.

Lower fees improve the shareholder proposition

Alliance Witan has also agreed revised terms with WTW. The previous tiered management and distribution fee has been replaced with a lower flat fee.

The fee is 0.46% in 2026 and will fall to 0.41% from 2027.

All else being equal, the ongoing charges ratio is expected to decline from 0.59% at the end of 2025, after adding back WTW's temporary fee waiver, to 0.57% in 2026 and 0.51% in 2027.

This is a clear positive. Lower annual costs leave more of the portfolio's return for shareholders and make the trust more competitive, particularly when performance is being compared closely with lower-cost passive funds.

Buybacks have supported the discount

Alliance Witan repurchased 9.8 million shares during the first half, double the 4.9 million bought in the same period of 2025. The purchases were equivalent to approximately 2.6% of average market capitalisation.

The discount averaged 4.9% during the six months, although it widened from 4.1% at the end of 2025 to 5.1% at 30 June 2026.

Buybacks can support the share price and may add modestly to NAV per share when shares are repurchased below asset value. They cannot guarantee that the discount will narrow, especially if investment performance or demand weakens.

What investors should watch next

There are three competing messages in these results.

First, Alliance Witan generated a respectable positive return, but relative performance was not good enough. A 5.7 percentage point shortfall against the benchmark is meaningful, and stock selection accounted for most of it.

Second, the trust's shareholder proposition is improving through lower fees, more buybacks and another planned dividend increase.

Third, the strategy review creates an important test. Management must improve implementation without losing the diversification that is central to Alliance Witan's purpose.

The key question for the second half is whether market leadership broadens beyond AI-related winners. A broader market could suit Alliance Witan's diversified portfolio, but continued concentration may keep relative performance under pressure.

The original company announcement contains the full unaudited interim report and financial statements.