Alliance Trust is to shift to a multi-manager investment model and double its return target following a six-month strategic review of the business.
The £3.5bn trust will appoint Willis Towers Watson (WTW) as its overall investment manager, replacing in-house manager Alliance Trust Investments, which is being sold to Liontrust as part of the overhaul.
WTW will oversee the appointment of eight underlying managers, each of which will run a concentrated portfolio of around 20 global stocks.
The trust's return target, currently set at 1 per cent above the performance of the MSCI World index after costs, on a rolling three-year basis, will rise to 2 per cent higher than the index as a result of the change. The company will also retain its focus on dividend growth.
Alliance Trust added it would introduce a new programme of share buybacks in order to reduce its discount to net asset value (NAV).
Having previously targeted on ongoing charge ratio of 0.45 per cent by the end of this year, the trust said it would now aim to keep total annual costs below 0.6 per cent.
Despite the disposal of its fund arm, the company is to retain its £12bn platform business Alliance Trust Savings, which the group said is now profitable.
Alliance Trust chair Lord Smith of Kelvin said: “Since May, the board has evaluated carefully a broad range of options, with an open mind and a clear line of sight on how best we could improve the trust’s performance.
"We firmly believe that [these changes] will put Alliance Trust on a strong footing for many years to come.”
Shareholders will be able to vote on the proposals at a general meeting in early 2017. The changes follow a strategic review which began in June, a year after the company first came under pressure to reform from activist investor Elliott Advisors.
A fierce battle with Elliott in 2015, prompted by accusations of underperformance, eventually saw the company admit defeat and appoint a number of external directors to its board. Chief executive Katherine Garrett-Cox and chair Karin Forseke subsequently stepped down from the company.
The strategic review began shortly after Alliance Trust received an approach from RIT Capital Partners regarding a possible merger of the two investment companies. RIT subsequently walked away from the deal.
