Investment Trust sackings deliver mixed results

Investment Trust sackings deliver mixed results

By Kyle Caldwell, Money Observer’s quarterly trust magazine

Kyle Caldwell analyses whether investment trust sackings stretching back over the past 15 years have resulted in improved performance for shareholders

James Carthew is quoted in an article looking at changes in investment trust manager (including mergers) which have been on the rise since 2011 as AIC figures show, with three notable changes in 2019. Boards are expected to be more proactive with tougher questions from shareholders and there is pressure on them to ensure they continue to grow and remain relevant.

Changing management group, though, doesn’t always work says the article. Trust magazine found mixed results for a sample of management changes over the past 15 years. Most impressive is Throgmorton since moving to Blackrock. Also Montanaro European Smaller Companies, Pacific Assets, Troy Income & Growth, Aberdeen Standard Equity Income and Witan.

James Carthew, head of investment company research at QuotedData, said, ‘Montanaro European has been a great success – the manager’s focus on quality has been rewarded. Likewise, for BlackRock Throgmorton, using shorts within the structure has added value and helped differentiate the trust from its peers, though the real success more recently comes from Dan Whitestone’s stockpicking skills.’…

Results are mixed for fund management groups that change manager but stick with the same management group, with Edinburgh’s decision to hire Mark Barnett in place of Neil Woodford in January 2014 being one such example.

Carthew notes: ‘A couple that we know well that have worked out for the best are the appointment of Dan Whitestone to run Blackrock Throgmorton (March 2015) and Iain Pyle to run Shires Income (May 2018)’.

“We liked the ESG approach that Alliance Trust adopted for a while – it made it stand out from the crowd. The Willis Towers Watson idea worked for a while, but not recently…”

Full article in the print magazine.