Failing trust turned around and marketed to advisers

Failing trust turned around and marketed to advisers

Phoenix Asset Management is opening its investment trust to retail investors after turning round what it claims was the worst performing trust in the country.

The company took over running Aurora Investment Trust in January 2016 after a period of poor performance.

Over the five year period between 2010 and 2015 the trust failed to make any return on a £1, while its benchmark, the FTSE All-Share index, increased by around 22 per cent.

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Tristan Chapple, director of the trust, said that since taking over the investment Phoenix has increased its market cap from £16m to £73m by offering it to the company’s existing clients which include pension funds and university endowments.

Now the trust’s performance has been turned around – returning 25 per cent since Phoenix took it over – it is being marketed to intermediaries as part of Phoenix’s bid to enter the retail sector.

Mr Chapple said he believed Phoenix’s style of value investing by buying a small number of stocks would resonate with retail investors.

He said: “An investment trust allows those investors to access the Phoenix style in a product we are able to provide from a regulatory point of view.

“Aurora Investment Trust held the dubious distinction of being the worst performing trust over any timeframe you like.

“We have taken its market cap to £73m by cross-selling it to the institutional investors who already know us.

“Now with some kind of mass that makes sense we have been able to go to the intermediary market and platform market to tell them our story.”

Mr Chapple said the trust typically holds between 15 to 20 stocks which it buys to hold.

He said its most recent investment was in EasyJet, which makes up 3.5 per cent of the portfolio.

Mr Chapple said: “It was a Brexit opportunity. The price fell a lot in the week of Brexit but there are more people who fly EasyJet who never touch British soil than those who do.

“They are by a reasonable definition a European airline and now they have got an Austrian domicile.”

He said housebuilders were another Brexit opportunity which was like “Christmas come early” because their prices fell after the referendum and Phoenix is already familiar with many of them.

Two of Aurora’s top 10 holdings are housebuilders Bellway and Redrow.

Mr Chapple said: “The builders was something we have owned since 1998 so we are pretty sure who to value a housebuilder.

“There was nothing we could see in the act of voting to leave the European Union that would make housebuilders worth 40 per cent less.”

Sebastian Hurst, a chartered financial planner with Plutus Wealth Management, said: "I would be quite cautious with a trust which has had a period of such bad performance recently. But also because of the fact they turned it around so quickly."