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 dire

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.

‹ Previous2017-02-02Next ›