The Board of Alliance Trust has issued a response to the most recent criticisms of the investment company by Elliott Advisors in which it defends both its performance and the transparency of its charges.
In a statement the Board noted it had “a responsibility to correct and clarify some of the more misleading assertions in Elliott’s most recent statement”.
It said it “stands by” the investment performance figures stated in the shareholder circular arguing this showed performance on both a net asset value total return and a total shareholder return basis ranked the trust in the top half of its peer group “for the majority of the time periods most commonly referred to by investment professionals”.
It added that since its changes to the investment management team at the end of September 2014 the company’s performance ranks it ninth out of the 35 trusts in the Morningstar global sector investment trust index on a net asset value total return basis, and 11th out of 35 on a total shareholder return basis.
Earlier this week Elliott Advisors stated the circular sent to shareholders by Alliance Trust “fails to engage on matters of substance and resorts to personal attacks”. It argued the trust had underperformed its sector peers and relevant benchmarks across all relevant return periods and claimed the ongoing charges figure published by Alliance Trust was “not a true reflection” of the costs involved.
The investment trust, however, “refutes Elliott’s allegation that the true cost to shareholders is higher than reported”, arguing that that the ongoing charges ratio is audited and calculated in accordance with the AIC guidelines.
The board also addressed the issue of corporate governance stating that the Board’s recommendation to vote against the three non-executive directors proposed by Elliott “is based on the process through which they have been proposed”.
It explained this “is not a reflection on the nominees themselves or their track records”.
Alliance Trust concluded: “The Board intends to initiate a search for an additional independent non-executive director in the summer and would be happy to meet with and consider any candidates put forward by any shareholder, so long as they are subject to the same rigorous and robust selection processes the company always employs.
“We welcome shareholder engagement, but this does not mean we have to agree with all proposals put to us by individual shareholders.”
Ahead of the vote, to be held at the annual general meeting on April 29, Elliott Advisors have increased their voting rights to approximately 10 per cent.
The company still holds a 12 per cent stake in Alliance Trust, but a change in the composition of its holding in shares and derivatives, means its direct voting rights has increased from roughly 5 per cent to almost 10 per cent.