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Reformed Alliance Trust wins Citywire’s ‘Best Board’ Award

4 November 2019

Award made in recognition of role independent, non-executive directors have played in overhauling the global investment trust after its defeat in a bruising corporate governance battle four years ago.

Alliance Trust (ATST) has won the Citywire ‘Best Board’ Award for the role its independent, non-executive directors have played in overhauling the global investment trust after its defeat in a bruising corporate governance battle four years ago.

Elliott Associates, the activist US hedge fund, built a 12% stake in the Dundee-based company and used the position to successfully campaign against Alliance’s extended business empire, high costs and poor investment performance.

Since 2015 - when Elliott forced Alliance to accept two new independent directors - the board has been replaced, its previous chief executive Katherine Garrett-Cox sacked and the business refocused as a listed global portfolio.

Key disposals, such as the £30 million sale of its fund management subsidiary to Liontrust and the £40 million transfer of its share dealing platform to Interactive Investor, had streamlined the business in the past two years, the Citywire judging panel said.

Last year also saw the appointment of Willis Towers Watson to run Alliance’s global equities portfolio under a ‘multi-manager’ strategy in which management of investors’ assets are outsourced to external investment groups.

Share buybacks and marketing had succeeded in halving the discount at which the shares had previously traded below net asset value, helping to improve shareholder returns in the £2.6 billion trust.

While the Citywire judges said it was too early to say if the decision to appoint WTW had been right, there was no doubt the now five-strong board had worked hard on behalf of investors once it had become clear that change was needed.

John Newlands, founder of Newlands Fund Research and a member of the judging panel, had been a longstanding critic of Alliance Trust, but praised the board for having tackled the issues it faced.

‘For several years I was a prominent critic of Alliance Trust, with its unhappy combination of underwhelming investment performance, wide discount to net asset value, the increasing presence of circling activists and the lack of any apparent desire or willingness to do something about it,’ he said.

‘The fact is the present board was faced with serious issues, it tackled them head on and it implemented significant change, at a rapid pace and so far to good effect. That is very much a beacon for best practice going forward, hence our nomination.’ 

Citywire’s annual ’Best Board’ award is designed to highlight the role of boards of directors whose job is to look after shareholder interests. An independent board is one of the main advantages investment trusts and investment companies listed on the London Stock Exchange have over other types of investment funds.

The award was made last week alongside 18 Citywire performance awards to the investment trusts with the best investment portfolio performance in the past three years.

Alliance Trust beat F&C (FCIT) and Fidelity Asian Values (FAS) which had also been shortlisted. The previous winner last year was Schroder Asian Total Return (ATR).

The award comes at a turning point in the trust’s development. Two months ago, its former chairman Lord Smith of Kelvin stepped down, signalling that its restructuring was complete.

Gregor Stewart, Alliance’s new chair, is a former finance director of Lloyds bank’s insurance business who joined the board five years ago.

Four other non executives have joined Stewart on the board in the past four years. They are: Karl Sternberg, former global head of equities at Deutsche Asset Management; Anthony Brooke, ex-vice chair of merchant bank SG Warburg & Co; Clare Dobie, a former Times journalist and group head of marketing at fund manager GAM; and Chris Samuel, former boss of Ignis Asset Management.

Robbie Robertson, the former managing director of Canaccord Genuity’s investment companies team, who was Alliance’s broker during Elliott’s campaign and who oversaw its exit and sale of its stake, collected the award on behalf of the board.

The two other judges on Citywire’s Investment Trust Awards committee are Ewan Lovett-Turner, head of investment companies research at Numis Securities, and Genevra Banszky von Ambroz, a fund manager at Smith & Williamson. The committee is chaired by Citywire editor in chief Gavin Lumsden.

Investment company news brought to you by Citywire Financial Publishers Limited.

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