By Charlie Parker

LONDON (Citywire) - Close Investments is set to lose three of its investment trust mandates, representing 556 million pounds, to former managing director Alastair Smith.

Smith has established a new firm Frostrow Capital to provide secretarial, marketing and administration services to investment trusts, the same services offered by his former employer Close Investments.

Investment trust insiders have told New Model Adviser that within days three investment trusts, Finsbury Emerging Biotechnology, Finsbury Growth & Income and Finsbury Worldwide Pharmaceutical trust will all move to Frostrow.

The actual investment management arrangements with Nick Train of Lindsell Train for the Growth & Income fund and with Orbimed Adviser's Sam Islay for the other two trusts will stay in place on an outsourced basis though it is believed that management costs will drop as part of the changes.

This will enable Smith to launch his new firm with assets under management of around 500 million pounds and will essentially strip out the rump of the assets that made up the Close Finsbury boutique before it was absorbed into Close Investments in 2006.

Smith left the company around that time and in his new enterprise is also planning to launch investment trusts and other closed-ended funds for European investment boutiques seeking a vehicle with a London-listing.

Smith was unable to comment on the three trusts but said: "Frostrow hopes to attract existing trusts and new mandates. An announcement on these things is imminent."

(c) Citywire Financial Publishers Ltd 2007.