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Alliance Trust reveals managers to run revamped trust

Global investment trust reveals the managers who will run it under new 'multi-manager' structure.

Alliance Trust reveals managers to run revamped trust
Alliance Trust (ATST) has revealed the fund managers who will be responsible for running the investment trust under the new multi-manager approach it is proposing to shareholders.

The global investment trust announced last month it was selling its fund management business, which has run the fund, and appointing consultants Willis Towers Watson to select a panel of managers.

Willis Towers Watson has now selected eight fund groups to run the trust. Each will manage a global portfolio of around 20 stocks, apart from GQG Partners, which will a portfolio of around 70 stocks, which around 50 from emerging markets. Each of the portfolios will be equally weighted in the trust at outset.

The managers are:

GroupFund manager(s)Style
Black Creek Investment ManagementBill KankoMarket leaders with growing market share
First Pacific AdvisorsPierre Py, Greg HerrLong term value
GQG PartnersRajiv JainHigh quality, sustainable businesses
Jupiter Asset ManagementBen WhitmoreContrarian value
Lyrical Asset ManagementAndrew WellingtonQuality value
River and Mercantile Asset ManagementHugh SergeantRecovery
Sustainable Growth AdvisersGeorge Fraise, Gordon Marchand, Rob RohnHigh quality global growth businesses
Veritas Asset ManagementAndy HeadleyQuality companies at the right price

Source: Alliance Trust, Numis Securities

Under the revamped structure, charges are expected to rise from the current 0.45% to around 0.6%, but Alliance Trust claimed this was 'a highly competitive rate for an investment trust offering access to such best-in-class managers and targeting this level of outperformance', with a new aim of beating the MSCI All Country World index by 2% over three years, up from 1%.

Witan (WTAN), the rival global trust with a comparable multi-manager approach, carries a 1.08% ongoing charge.

The manager line-up won the approval of Canaccord Genuity analysts, who said the changes reinforced their 'buy' rating on the trust.

'We believe that this unique and innovative approach which features high conviction and genuine active management, combined with a low-cost structure provides strong foundations for Alliance Trust to now deliver a sustained improvement in performance,' they said.

But Numis analysts were more circumspect, saying Alliance Trust would need strong support from retail investors in order to win approval for the plans at a general meeting on 28 February.

They pointed to the threat from activist investors Elliott Advisors, whose pressure lead to high-profile exits from the trust in a boardroom shake-up.

'The board of Alliance Trust has still not addressed the problem of how to find an exit for Elliott Advisors,' they said.

Numis said it did not believe Elliott had been selling any of its stake in Alliance Trust's big-buy-back operation since the revamp was announced, meaning its stake could now have swollen to 19.5%.

'Given the size of Ellliott's stake, the board will need a decent turnout from retail shareholders in order to gain shareholder approval for the changes at the forthcoming general meeting,' they said.

Unlike Witan, which combines global portfolios with regional specialists, each of Alliance Trust's managers will have a global approach. The mandates they will run will be segregated, making it easier for Willis Towers Watson to replace a particular manager or reweight their portfolio.

In a report on the changes Alliance Trust paid Kepler to produce, the investment trust researchers said shareholders would bear a 0.3% cost for transition, which would take around two months.

It said the changes would lead to a big shake-up of Alliance Trust's portfolio, with a heavier proportion in US and UK stocks and less in emerging markets and Japan.

Technology stocks, which currently make up around 13% of the trust's portfolio, would become the largest sector allocation, while financials exposure would be cut.

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