Let bygones be bygones

150 years after the launch of the world’s first ever collective investment fund, the Foreign & Colonial Investment Trust has formally changed its name. David Prosser finds out more and examines the significance.

So farewell then Foreign & Colonial Investment Trust. Exactly 150 years after the launch of the world’s first ever collective investment fund, the Foreign & Colonial Investment Trust this week formally changed its name to F&C Investment Trust. That represents something of a moment – it marks the disappearance of a name that has been synonymous with pooled fund investment since the concept was invented.

It’s the sort of definitive break from the past that riles sentimentalists and traditionalists. Indeed, media reports earlier this year of the fund’s intention to make this move prompted plenty of outraged comments.

The change reflects the view of the fund that today’s investors might be put off by the Foreign & Colonial name, which harks back to a bygone era for Britain. Another part of the story is the fact that F&C Investments, which runs the trust, was four years ago bought by the Canadian asset management firm BMO. It has been steadily rebranding many of its subsidiary’s ventures, often dropping even the F&C acronym.

So, should we join the ranks of those who mourn the demise of the Foreign & Colonial moniker? Well, you can take your own view on the arguments for and against the decision, but the reality is that the world changes. After all, many of the investment trusts that followed Foreign & Colonial’s lead in the 1860s and 1870s – particularly those from the Robert Fleming stable – invested considerable sums in the development of the railroads in the US and elsewhere; no-one is upset that such funds have moved on to different types of opportunity in recent times.

There’s a broader point here too. Every good business understands that standing still for too long is likely to spell disaster – that if they do not make changes to reflect the way in which the environment around them is changing, they will begin to lose relevance. The same applies to investment funds – hence the difficulty of securing exposure to US railroad stocks these days.

Investment trusts are unique in this regard. They’re not products that have been created by a marketing manager to tap into the latest market fads; rather they’re companies in their own right, run by independent boards with a legally binding responsibility to safeguard the interests of the shareholders.

This is important: the board must constantly strive to ensure the company’s value proposition remains relevant and attractive. An underperforming fund launched by a giant asset manager can be closed down, or just quietly forgotten about. In the investment company universe, the board has an obligation to take action – there are no guarantees it will deliver a reversal of fortunes, but it has a fiduciary duty to try to do so.

None of which is to belittle the Foreign & Colonial name, or even necessarily to contradict those who think it should not have been abandoned. Rather, the point here is that this departure is just the latest in a series of changes that the fund has undergone over the past 15 decades as its board has sought to sustain and enhance shareholder value in a changing world. Boards will make mistakes along the way, of course, but the endurance of this fund – and the investment company model more generally – suggests they’re getting something right.