THE DEPUTY chairman of Dundee-headquartered Alliance Trust has said a major restructuring that took place in the first half of last year is proving to be a success, with the portfolio delivering a solid set of results for the year as a whole.

In the 12 months to the end of December the trust, which had net assets of £2.7 billion, made a total shareholder return of 19.2 per cent and a net asset value total return of 18.5 per cent. Over the same period its benchmark, the MSCI All Country World Index, returned 13.8 per cent.

Deputy chairman Gregor Stewart said the results were “very encouraging”, particularly as the trust had beaten its own target for outperforming the index.

“We are targeting outperformance of two per cent on a rolling three-year basis and we have done double that target net of costs,” he said.

“It’s early days and we are in this for the long term but we are delighted with the short-term performance.”

The results have come after the trust, which had been dogged by underperformance for a number of years, was completely overhauled by chairman Lord Smith of Kelvin after it became the target of activist investor Elliot Advisors.

As part of that Alliance Trust Investments (ATI), which managed the trust and was also one of its holdings, was sold to London-headquartered Liontrust Asset Management.

Responsibility for managing the trust itself was passed to eight external fund houses chosen and overseen by investment business Willis Towers Watson (WTW).

David Shapiro of WTW said it was thanks to the multi-manager approach that the trust was able to generate greater returns than the index over the course of the year.

“The nice thing for shareholders is that we hoped we could build a really nicely blended portfolio that looks nothing like the index and it’s those managers’ picks that are driving returns,” he said.

Mr Shapiro added that there had been no change to the line-up of managers appointed in April, with “almost all” managing to outperform in their first nine months on the trust.

Thanks to an aggressive share buyback policy the trust’s discount, which averaged 5.4 per cent during the year, closed at four per cent.

Mr Stewart said there had been a “progressive reduction” in the number of shareholders looking to sell their shares over the course of the year.

Meanwhile, subsidiary Alliance Trust Savings, which was dogged by customer service issues over the course of the year, made a loss of £19.3 million in 2017.

This more than offset the profit the trust had made as a result of selling ATI to Liontrust.

Liontrust paid for ATI in a mixture of cash and shares. In January Alliance Trust sold the first tranche of shares it received, generating an income of £21.1m from the sale. When the deal went live last April those shares were valued at £13.6m.

Alliance Trust will receive just over a million more shares in April and must hold them for at least a year These shares were valued at £3.4m when the deal was announced but have risen in value to £5.8m at current prices.