Similarly, while guardedly positive on the shift to a multi-manager approach, Charles Cade of Numis and John Newlands of Brewin Dolphin said that much will depend on which eight managers are chosen.
Cade went further adding: that while he believes there remains a role for a liquid, low cost vehicle that can outperform global markets, “a lot has to be taken on trust”.
Not only is there no clarity on who the managers are going to be, but also “It is not clear whether the fund will use gearing or what its future dividend policy will be (it currently pays a quarterly yield of 2.1% pa and has increased its dividend for 49 consecutive years). In addition, we are wary of whether a consultant-led investment approach will appeal to retail investors.”
But, while a certain amount of impatience is understandable given the perennial nature of the disappointment and the length of time it has taken to reach this point, there are some analysts that are viewing the shift more positively.
Marten & Co analyst, Matthew Read, is one such, pointing out on Thursday that one should not forget how much has actually changed at a board and management level in the past 18 months.
And, he added: Given its size and shareholder base, there are natural limits to how far and fast the board can move the trust from its historic mandate. Alliance Trust is a big vehicle and it has a large chunk of shareholders that see it is as a safe core holding. These shareholders, while likely wishing to see narrower discount and improved performance, are unlikely to want to see it moving into too racy areas.”
Patrick Thomas, investment manager at Canaccord Genuity, is also positive saying that he is “quietly impressed by the strategic review”.
While at present, the firm is still not ready to recommend the trust for discretionary portfolios, he said it has at least reached a point where the elements are there for it to build on.
“They have got to a point where they are at least competitive on cost and the buy-back programme is encouraging.”
For Tilney Bestinvest managing director Jason Hollands the moves bring the Trust more in line with current trends.
“Alliance Trust were certainly out of step with the rest of the industry in retaining a whole owned fund manager rather than appointing external managers, which many argued and a conflict of interest… Over the years other trusts have moved away from a single manager model to a partial or wholly ‘manager of manager’ basis with varying degrees of success and I think most investors will want to wait and see how this develops.
