Global multi-managed trust Witan’s (WTAN) full-year results (11 March) revealed the investment trust returned less than half that of the benchmark during 2020, at 4.2% versus 9.5% respectively.

This lagging performance once again raises the question whether investors would be better off buying a low-cost global exchange-traded fund, especially as Witan’s ongoing charge of 0.8% is higher than the AIC Global Sector’s 0.5% average.

After all, Witan is supposed to have a panel of some of the best stock pickers in the world and to provide access to these managers’ best ideas. If it cannot beat the market, why pay extra for active management?

Over 10 years to 31 December 2020, the NAV total return is 156.1% versus a benchmark total return of 141.7%. That is positive, but it is worth noting that the MSCI All Country World index total return over this period is greater at 189.5%. ‘Over five years, Witan ranks 172nd out of a peer group of 236 global open and closed end funds,’ says Investec analyst Alan Brierley.

The investment trust’s benchmark is comprised of 15% UK (FTSE All Share index) and 85% global (FTSE All County World index).

Witan has paid the price for having relatively low exposure to the US market, something which has now changed as it plays catch-up. However, there is a risk it is chasing a market at the peak of its popularity. Furthermore, its decision to remove a value manager last June looks like poor timing given how the value investing style has been in vogue since November.

Overweight Asian exposure was positive for performance in the second half of 2020, while the year also proved a game of two halves for the direct fund holdings.

These underperformed following the outbreak of the pandemic as discounts widened but by the end of the year, the direct holdings portfolio had outperformed Witan’s benchmark, helped by the likes of BlackRock World Mining Trust (BRWM).

At 226.5p, Witan trades at a 7.1% discount to the value of its underlying assets, wider than the 4% average in the 16-strong AIC Global sector. Research group Edison believes there is potential for the discount to narrow.

While the 2020 dividend was uncovered, the annual shareholder reward rose by 1.9% to 5.45p, marking a 46th consecutive increase, more than double paid in 2010.

Despite the performance issues, Numis’ investment trust team say there are reasons to remain positive on Witan. ‘We believe that the shift towards a more global, stylistically neutral approach makes the fund a more attractive proposition.’

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