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New manager on his plans for Barnett’s stricken trust

New manager on his plans for Barnett’s stricken trust

Abandoning the unquoted holdings and removing the focus on the value style of investing are among the measures being taken by James De Uphaugh as he seeks to turn around the performance of the stricken Edinburgh investment trust.

Mr De Uphaugh and his firm Majedie won the right to manage the trust in March, replacing Invesco’s Mark Barnett.

The trust had lost 14 per cent in the three years to March 4, compared with a gain of 17 per cent for the average trust in the AIC UK Equity Income sector in the same time period. 

Mr Barnett, who had replaced Neil Woodford as manager of the trust, had followed a broadly similar strategy to his predecessor, with substantial holdings in unquoted companies and investments in stocks that are exposed to the performance of the UK domestic economy, following the value style of investing. 

Mr De Uphaugh told FTAdviser that when he took charge of the trust “the mandate was for a portfolio of listed shares only".

"And value investing has become a pejorative term. I would say I am a more flexible fund manager than that. There are value stocks in the trust now, but also growth stocks. What I have been doing is moving it much closer to the institutional portfolios run for clients.”      

Among the areas of the UK market on which the manager is focused are mining companies, and supermarkets. 

He said: “In the UK we are very good at talking ourselves down, and at the moment there is a lot of negativity around the UK market right now, but Astra Zeneca for example, is a world leader in the search for a Covid vaccine, while Unilever showed during the pandemic that it can pivot to the areas of most demand very quickly.”   

Mr de Uphaugh said he has personally invested his money in the shares of the trust since he became manager. 

The £1bn trust trades at a discount to its net assets of 13 per cent.

Mr De Uphaugh said at present the board did not plan to launch a significant programme of share buybacks to close the discount and instead wanted Mr De Uphaugh to improve performance and awareness of the trust as a way to increase the share price and narrow the discount. 

Darius McDermott, managing director at Chelsea Financial Services, said: “Edinburgh has long been associated with the value style of investing, and any change from that style needs to be very clearly communicated to investors.

"Having said that, it's understandable the way the market is now. If you look at the data across all platforms, people are buying growth trusts, not value trusts.”  

dvid.thorpe@ft.com