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Alliance Trust hives off investment team in strategy shake-up
December 15, 2016 / 10:04 AM / 10 months ago

Alliance Trust hives off investment team in strategy shake-up

LONDON, Dec 15 (Reuters) - Scottish asset manager Alliance Trust announced an overhaul of its strategy on Thursday, including outsourcing its equity portfolio management to a group of external investment managers.

The 128-year-old-trust announced the plan following a six month review, and said it aims to double its pace of outperformance against a global equity benchmark index.

The changes come after Alliance, one of Britain’s largest investment trusts, faced pressure last year from activist investor Elliott Advisors who said it needed a shake-up given the fund’s underperformance and the gap between its shares and the value of the assets it holds.

Under the new strategy Alliance, which has total assets of about 3.6 billion pounds ($4.51 billion), will move from having its internal team manage its equity investments to using eight external managers that will each create a portfolio for the trust of around 20 stocks. Equity investments make up 99 pct of the firm’s net assets.

Its in-house investment team, Alliance Trust Investments, will be sold to Liontrust Asset Management for up to 30 million pounds.

Chairman Robert Smith said in a statement he was confident “this investment approach will help to improve Alliance Trust’s performance on a consistent basis.”

Shares in Alliance Trust were up 1.7 pct at 607 pence at 0953 GMT, just off their all time record high.

Elliott forced Alliance Trust’s Chief Executive Katherine Garrett-Cox, one of the City of London’s most high profile women in business, to step down from the group’s board in October 2015. She also stood down as head of Alliance Trust Investments in March.

In June the trust received an informal merger approach by RIT Capital Partners, the investment trust of financier Jacob Rothschild, which later walked away from the negotiating table saying a deal would not be in the best interests of its investors. ($1 = 0.7980 pounds) (Reporting By Pamela Barbaglia; Editing by Rachel Armstrong)

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