A wave of management moves has swept through the investment trust industry, with 18 per cent of vehicles changing hands since the start of 2014, new figures have revealed.
Research from the Association of Investment Companies (AIC) found “the last year and a half has seen a large number of fund manager changes in the investment company sector”.
Ian Sayers, chief executive of the AIC, said while part of the unusually high turnover may just be “coincidence”, many of the changes have been due to “independent boards addressing long-term performance issues”.
In spite of the high short-term turnover, the AIC’s research found many of the oldest trusts had long-serving managers.
Its study discovered that 45 per cent of trusts with at least a 10-year history had the same managers at their helms for at least the past decade.
But the retirement of several long-standing managers has exacerbated the spike in manager turnover, with the likes of Jeremy Tigue stepping down after 17 years on the Foreign & Colonial trust.
Most of the fund manager moves have been the result of internal changes at the firms controlling the mandates, with only six trusts in the past 18 months going through the kind of full management change seen at British Assets trust, which was taken off F&C Asset Management and handed to BlackRock as part of a strategy overhaul.
On a sector basis, the highest proportion of manager turnover came within the Asia Pacific excluding Japan sector, where a third of the trusts had a new fund manager in the past 18 months, while more than a quarter of Global trusts went through a reshuffle.
Iain Scouller, head of investment trust research at Stifel, said while the rate of turnover reported by the AIC may seem slightly high, it still only implied an “average [manager] tenure of eight years” at a rate of 12 per cent per annum.
But he agreed independent boards on trusts were “probably keener to appoint a new portfolio manager than in the past” if their trusts were underperforming, due to the “need to be seen to be delivering a top product for shareholders”.
Charles Cade, head of investment companies research at Numis Securities, said the rate of manager change in the past 18 months “has probably been a little higher than usual” and put the trend down to “the retirement or movement of some high-profile managers”.
He said: “Where these changes occur, the boards often take the opportunity to reassess mandates and decide whether new management groups should be considered.”
However, he added that the AIC data had incorporated a broad definition of manager change and therefore had included instances when a deputy manager had been added to a trust, with no change in the lead manager or strategy, such as on the Troy Income & Growth Trust.
Why has manager turnover been so high?
Charles Cade, head of investment company research at Numis Securities, said there were four main reasons for the recent fund manager changes on trusts.
The first were instances where a trust’s board had changed its mandate to differentiate itself from its peers. For instance, when the British Assets trust was handed to BlackRock, renamed as BlackRock Income Strategies, and changed to a multi-asset income mandate.
The second was down to the retirement of long-serving managers, such as Jeremy Tigue on Foreign & Colonial or Anthony Bolton on Fidelity China Special Situations.
Several trusts, most notably Alliance Trust’s move to a sustainable responsible investment (SRI) mandate, have also seen board-driven change.
Then the rest have been traditional manager moves, such as Neil Woodford leaving Invesco and, by extension, the Edinburgh Investment Trust.
