Investment Trusts  

Trust mergers a 'wake-up' call for open-ended funds

Gilligan said this could prove a test of the new management’s talent.

“One big risk with the announced change is if we see a strong resurgence in value and gold mining stocks,” he said. 

“However, the new managers have scope to take advantage of such a rotation. 

“This would be a strong test of the new management’s credentials.”

Contrarian strategy

McKinnon took over the trust in 2015 and since then has led a contrarian strategy, investing in undervalued international companies with the aim of generating long term growth and targeting dividend growth that beat UK inflation.

This week McKinnon said the management team had adopted the strategy as it played to the trust’s strengths as a single product, self-managed company. 

He said: “We thought that, through a full investment cycle, a contrarian approach would work as well, if not better, than any other investment style. Overall our results to date have not been what we hoped for even though the share price has shown a healthy increase and we’ve paid a good dividend.”

He said some have argued that it’s too early to tell if this is the right time to make a strategy change given that investment cycles tend to be long.

“These are noteworthy points but the most important thing is that we do the right thing for the company," he added.

sally.hickey@ft.com