Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Monks shares rise as 'alpha' manager replaces Gerald Smith

Monks shares rise as 'alpha' manager replaces Gerald Smith

Baillie Gifford's Gerald Smith, the manager of Monks (MNKS) investment trust, has been replaced as the global fund seeks to reverse a lengthy period of poor performance.

Charles Plowden, the Citywire A-rated manager of Baillie Gifford's Global Alpha Growth fund, has become the £900 million fund's new manager following a review by the trust's board and the Edinburgh-based investment group.

Smith's deputy Tom Walsh moves aside for Spencer Adair and Malcolm MacColl, who work in the 'global alpha' team led by Plowden and are co-managers of the Alpha Growth and Baillie Gifford International fund.

Shares in Monks rose 6p or 1.4% to 425p as analysts hoped the new team would lift the trust from the bottom half of the Global Growth performance league table where it has resided for many years.

Smith (pictured), a partner in Baillie Gifford, took over Monks in 2006 but was held back by an overly defensive stance in the post-crisis environment. The arrival of Walsh in 2013 saw some changes to the portfolio but did not improve stock picking. The two managers will continue to work in Baillie Gifford's global opportunities team on institutional funds.

Alan Brierley of Canaccord Genuity, who had slapped 'buy' recommendation on the trust last year in anticipation of a shake-up, said: 'Although we have a high regard for Gerald Smith, Monks had clearly lost momentum and the time had come for a change.'

'If the new management team can extend what is a strong long-term track record, then we would expect a long overdue re-rating to compound these returns,' he added.

Over the past five years Monks had generated a total return of just 40% for shareholders, underperforming the MSCI World index return of 68% and leaving it miles behind Scottish Mortgage Trust (SMT), Baillie Gifford's flagship fund, which has topped the global sector with a 134% return. Meanwhile, Baillie Gifford Global Alpha delivered 72.7%.

The poor performance sapped demand for Monks, with the discount - or gap between the share price and the trust's net asset value - widening from 10% to 14% in the past year, in contrast to most other global trusts who saw their discounts narrow or disappear.

The discount is a similar level that has seen rival Alliance Trust (ATST) this month challenged by its largest shareholder Elliott Management. Baillie Gifford would have been keen to replace Smith rather than lose another global trust following the decision last year of the board of Mid-Wynd International (MYW) to switch to Artemis Fund Managers.

Monks' chairman James Ferguson said Plowden had a well-established process and a strong performance record. He said the global alpha team looked after £20 billion for institutional investors and ran a actively managed portfolio of around 100 long-term growth stocks that was unlike any global index. Ferguson said the team drew on the insights of Baillie Gifford's 90 research analysts.

He said there would be no change to the trust's focus on capital growth over dividends or a reduction in its 0.45% annual management fee.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

Charles Plowden
Charles Plowden
10/484 in Equity - Global (Performance over 3 years) Average Total Return: 71.65%
Spencer Adair
Spencer Adair
12/484 in Equity - Global (Performance over 3 years) Average Total Return: 71.65%
Malcolm MacColl
Malcolm MacColl
11/484 in Equity - Global (Performance over 3 years) Average Total Return: 71.65%
Gerald Smith
Gerald Smith
Citywire TV
Play Citywire 20: Investec's du Toit on managing the 'jerk factor'

Citywire 20: Investec's du Toit on managing the 'jerk factor'

Investec boss Hendrik du Toit believes he has become far more decisive over the last 20 years, especially when it comes to managing 'jerk' factor.

Play Citywire 20: Hugh Young's bleak lesson

Citywire 20: Hugh Young's bleak lesson

In the latest video to mark Citywire's 20th birthday, Aberdeen Standard Investments Asia head reminisces about one of the toughest periods in his career.

Play IWD 2019 video: fund and wealth figures define diversity

IWD 2019 video: fund and wealth figures define diversity

To mark International Women's Day, we have spoken to a variety of top fund houses and wealth managers about their definition of diversity, and how they hope to achieve a more inclusive workplace.

Read More
Wealth Manager on Twitter