Investments  

Alliance Trust writes down value of its platform business

Alliance Trust writes down value of its platform business

Alliance Trust, the £2.9bn investment trust, has written down the value of its investment in platform Alliance Trust Savings.

The company said customer service issues meant the platform business recorded a loss of £6.1m, which increased to £19.3m after exceptional items.

Alliance Trust has responded by writing down the value of its shareholding in Alliance Trust Savings by £23.5m to £38m. This more than offset the gain the company received from selling its shares in Alliance Trust Investments, the fund management business that it sold to Liontrust during 2017.

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Alliance Trust underperformed against the AIC Global sector in 2017, the first year in which the company’s investment portfolio was managed externally by Willis Towers Watson.

Willis Towers Watson was appointed to manage the trust in April 2017. Previously the investment portfolio had been run in-house, but following a period of underperformance and the activist investment firm Elliot Investors took a substantial shareholding, and the management changed. Elliot's shareholding has since been sold. 

In the year to March 2017 the trust returned 6 per cent, compared with 14 per cent for the average trust in the sector in the same time period. The expectation is that each of the managers appointed to run some of the capital will be given several years to run the money, and so not have to take a short-term view.

Willis Towers Watson’s role is to select external fund managers to run each part of the portfolio. There are eight managers, each of which have been given a segregated mandate to run some of the portfolio in the £2.9bn trust.

Willis Towers Watson appointed each of the managers due to their high conviction approach.

Alliance Trust announced a dividend of 3.29p, a 3 per cent increase on the previous year, and represents the fiftieth consecutive year when Alliance Trust has increased its dividend.   

David.Thorpe@ft.com