Does a change of manager help with investment trust performance?
Kathleen Gallagher, Investment Week, 3 February 2022:
Boards of investment trusts continue to utilise their powers to change investment manager, a benefit of the investment trust structure. However, have these changes borne fruit?
Three years is, by most analyst and investor standards, the timeframe when a management firm is expected to prove their worth. So, Investment Week looked back at the trusts that changed manager in 2017 and 2018 to see how they have performed.
Nine trusts changed manager in that timeframe. Some trends were noticeable in the group: two fell under attack by an activist investor, two have since wound up, two management teams feel it is too early to judge them and two did not end up changing management style, despite changing managers.
Activist investor attacks – Alliance Trust and Electra
Alliance Trust and Electra both caught the attention of activist investors, leading to their change.
Alliance Trust was self-managed by Alliance Trust Investors and was under the management of Katherine Garrett-Cox.
However, following criticism from Elliott Advisers and other shareholders, the management made significant changes in October 2015, including removing Garrett-Cox.
The changes were clearly not enough, as the management changed hands less than 18 months later to Willis Tower Watson, who now manage the vehicle as a multi-manager fund.
“The decision to scrap its self-managed structure, simplify its corporate structure and adopt a manager of managers approach was a bold one,” said James Carthew, head of investment companies at QuotedData.
“It seems to have worked well, however. The portfolio’s mix of value and growth styles means the trust can be a relatively solid all-weather investment.”
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