Investment Trusts  

Trust ditches Invesco and the UK for global Baillie Gifford

Trust ditches Invesco and the UK for global Baillie Gifford

The Keystone Investment trust is looking to hire Baillie Gifford as its new manager in yet another blow to Invesco’s investment trust business.

A stock exchange announcement, published today (December 7), said the board had decided to appoint Baillie Gifford and its global equity strategy to the trust subject to shareholder approval.

Keystone, which currently has a UK-focused mandate and is managed by Invesco, began searching for alternative managers and remits earlier this year after questioning whether the UK enabled investors to “capture the most compelling investment opportunities”.

The board is today proposing that the trust’s investment objective be changed to incorporate two goals: to generate an attractive investment return of at least 2 per cent per year above the MSCI World index over rolling five-year periods, and to contribute to a more “sustainable and inclusive world”.

Keystone’s investment policy will also be changed to focus on an active, long-term, global equity strategy, using around 30 to 60 quoted and unquoted stocks.

Karen Brade, chairwoman of Keystone investment trust, said: “We are pleased to propose Baillie Gifford’s successful positive change strategy, tailored to take advantage of the company’s investment trust structure.

“We were impressed by the positive change team’s strong ethos, investment process and performance record, and by Baillie Gifford’s enthusiasm to reposition the company for long term success. 

“We now aim to deliver attractive returns through investing in companies addressing critical challenges in areas such as healthcare, education, social inclusion and the environment, and to meet the demands of a wide range of investors who are seeking opportunities to invest in solutions to global challenges.”

The change will see the trust change its name from Keystone to Keystone Positive Change and the fees altered from 0.6 per cent a year to 0.7 per cent on the first £100m, 0.65 per cent on the next £150m and 0.55 per cent thereafter.

Its performance fee, currently around 15 per cent of any outperformance of the FTSE All Share over three years above 1.25 per cent, will be scrapped.

Subject to shareholder and regulatory approval, the proposals are expected to be published in January 2021 and voted on at the trust’s meeting in February.

It is the latest in a string of investment trust losses for Invesco. In December last year, Invesco was replaced by Majedie as manager of the Edinburgh trust while the Perpetual Income and Growth trust is to be merged with Aberdeen Standard Investment’s Murray trust.

Invesco will also see its Income and Growth trust disappear as it is set to be merged with its own Invesco Perpetual Select structure

Stephanie Butcher, chief investment officer at Invesco, said: “We are disappointed by Keystone’s decision to adopt a change in investment objective and policy and therefore to appoint a new manager.

“As the board is aware we are a long-term, valuation driven, active manager. We believe that UK equities are, and will remain, an important component of our clients’ portfolios and we are optimistic about the prospects for the asset class once Brexit finally concludes and as global economies continue to recover from the huge dislocation caused by the Covid-19 pandemic.”