Bankers’ success shows post-RDR value of trusts

Jeff Prestridge

Jeff Prestridge

You would think that anything with ‘bankers’ in its title would be reviled by anyone and everyone.

‘Bankers? String them up, the lot of them. If that’s not possible lock them away and let them eat salted porridge until they can take no more.’ Believe me,

I have heard such comment on more than one occasion (remember, I write for The Mail on Sunday, which has a somewhat forthright readership).

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But au contraire. While banking hatred bubbles away like a rumbling volcano, Bankers Investment Trust has never been so popular. Its shares are trading close to net asset value and, despite recent stock market wobbles, manager Alex Crooke (unfortunate name) of Henderson Global Investors continues to do a sterling job delivering a combination of income and capital return for its army of private investors. Long live the trust.

Late last month I was privileged to attend a dinner at Trinity House (well worth a visit) overlooking the Tower of London to mark the 125th anniversary of the trust. Yes, it goes back to 1888 – the year when the English Football League was established, George Eastman patented the Kodak box camera and Vincent Van Gogh cut off his left ear while suffering from depression. To put this into context, the first ever unit trust, First British Fixed Trust, was not launched by M&G until 1931.

It was a fascinating night, a micro-history lesson, as current trust chairman Richard Brewster discussed the fund’s key moments in its 125 years of history while Trinity House’s collection of mariners’ clocks chimed merrily away and outside a slow drip of tourists stood in Trinity Square Gardens and gawked at the site of the Tower Hill scaffold where more than 125 men and women ‘for the sake of their faith, country or ideals staked their lives and lost’ (Thomas More was beheaded there on 6 July 1535). All I could think of was my Mail on Sunday readers: ‘Bankers! String them up!’ Or, in line with More’s fate: ‘Bankers! Off with their heads!’

The trust’s history is not all a bed of sweet-smelling roses. Founded by nine directors – seven of which were bankers, hence its name – it spent its first 50 years making money from investing in bonds, some exotically sounding such as the Florence El Dorado and Walnut Valley Railroad Company.

It also did not employ investment managers for 84 years. Although it has long been an advocate of paying shareholders quarterly dividends, this imaginative approach to the distribution of dividend income was only adopted in 1975 because Lord Blackford (Keith Mason) needed the dividend income from his considerable shareholding in a hurry to fund his somewhat colourful lifestyle.

But on the whole, the trust has been a resounding success – notching up 46 years of dividend increases (something an equity income unit trust would never be able to do in a month of Sundays) along the way and delivering long-term returns in excess of its benchmark the FTSE All-Share index. It has survived two world wars, the Great Depression and rode out the 2007 financial crisis with aplomb.