Investment trusts may be old in structure, but it doesn’t mean they are resistant to change.
One of their key positives is their ability to innovate and change to retain their relevance for today’s investors. We’ve seen a handful of funds do this recently, in different ways, and it proves the value and experience that an independent board of directors can add.
Investment trust boards are very good at listening to their shareholders and they’re not afraid to ask them exactly what they want.
No matter if it doesn’t fit with an asset management firm’s fund line-up, or that it’s not part of that firm’s long-term strategic planning. For them, there’s always an alternative, and if necessary a new manager can be brought in.
There are several recent examples of positive change. A very recent one is Hansa Trust. This fund was originally set up to preserve and grow the wealth of the Salomon family.
However, while this fund had some great features, there was little in the way of cohesion bringing them together.
A strategic review has resulted in the arrival of a new chief investment officer – a return to investing roots for manager John Alexander in the small-cap space, a widening of the fund’s investment remit to other asset classes and geographies, and the introduction of dynamic asset allocation.
None of these on its own is a radical change, but combined they make for a fund that’s much more in line with what investors are seeking today.
Another example is Aberdeen Japan. This used to be an Asian equity mandate that included Japan. But increasingly investors like to make their own decisions regarding an allocation to Japan, particularly given its rise in prominence since the appointment of prime minister Shinzo Abe.
So in late 2013, the fund changed its remit to focus solely on Japan and divested from Asia, making it more specialised but more relevant to today’s investors.
Yet another example is Alliance Trust. The arrival of Ilario Di Bon was the first of a number of changes made at this fund. This was soon followed by a re-alignment of research responsibilities among the analysts – and that included changes to the analysts themselves.
The fund now embodies the firm’s core skills, which have been clearly laid out, and already the performance has started to improve.
At other funds, the changes are a work in progress. British Assets has moved from sub-portfolios managed by several individuals at F&C, to just two managers – Ian Robinson for bonds and Phil Doel for equities.
Finally, at Henderson Global Trust there is a new man in charge after more than 30 years, following the decision by Brian O’Neill to step down from the fund’s management.
This created a window of opportunity to evolve this fund under the guidance of new manager Wouter Volckaert and to make it truly global, rather than retain a significant UK bias for reasons now historic.
These changes may not be huge, but they show that there’s no fear of change among investment trust boards and managers, and such activity should be encouraged. Relevance for today’s – and future – investors is key.
Jackie Beard is director of closed-end fund research at Morningstar
