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Elliott Associates to leave shareholder register after pushing for significant change over past few years

Previously underperforming fund Alliance Trust (ATST) is shifting strategy and appears to have quelled the criticism of activist investor Elliott Associates.

The Dundee-based trust has now agreed (27 Jan) to repurchase Elliott’s entire 19.75% holding at a discount of 4.75% to the prevailing net asset value (NAV).

That will reduce the size of the trust, provide a 1% boost to net asset value and see annual charges move up slightly, from a maximum of 0.6% to 0.65%.

Portfolio to increase
from 60 to 200 holdings

Alliance Trust will also move to a multi-manager investment strategy, tapping into the skills of numerous fund managers.

These proposals will be put to a vote at a shareholder meeting on 28 February.

In April 2015 Elliott led a rebellion against over the remuneration of the-then chief executive Katherine Garrett-Cox, leading to the appointment of two Elliott-backed independent direInv Trusts table

Next step

The new approach will see the in-house investment business sold to Liontrust Asset Management for £30m with consultant Willis Towers Watson overseeing the appointment of an eight-strong panel of third-party managers.

Each of these managers (see table) will select a portfolio of 20 high conviction stocks, with the trust’s individual holdings increasing from the current 60 to around 200.

10-year annualised total return (price) 8.5% against benchmark 9.3%

The performance target has been doubled to 2 percentage points above the MSCI World Index net of costs on a three-year rolling period.

The strategic changes could benefit shareholders but performance needs to be delivered to justify the extra cost.

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