/ INVESTMENT TRUSTS /
With this in mind, more than
40 per cent of investment trusts
now pay a quarterly dividend,
up 10 per cent on a year ago,
according to the Association of
Investment Companies. In 2010,
just 17 per cent paid a quarterly
dividend. A further 30 per cent
pay dividends twice a year. In this
way, investment trusts appear to be
adapting to a changing market.
Trust corporate
actions typically
occur at
moments of
weakness
Investment trust managers
and boards also appear to be
more receptive to a change in
management where performance
is poor or a key investment
professional has departed. It
remains the nuclear option,
however, and is still only
undertaken under strenuous
pressure. This was seen recently
with the resignation of Katherine
Garrett-Cox as chief executive
officer of Alliance Trust, who left
after a year of wrangling with
Elliott Advisors.
Stephen Peters, senior analyst
at Charles Stanley, says a change
trustnetdirect.com
of manager usually only comes at
times of real weakness. He gives the
example of the Mid Wynd trust,
which had a strong track record
when managed by Baillie Gifford,
before the manager resigned and
the trust was handed to Artemis.
Peters also points to BlackRock
Income Strategies, where the board
shifted management and strategy
on what had previously been a
poorly performing trust.
There have also been changes to
the range of holdings in investment
trusts as they have begun to make
greater use of their closed pool of
assets to move into less liquid areas.
Plaskett points to the £750m raised
by peer-to-peer investment trusts
in 2015: “There has been a lot of
issuance in the alternative income
area. Peer-to-peer has been the hot
topic, but further back there were
infrastructure funds,” he said. He
also points to areas such as loan
funds or private equity, in which
there is a growing movement
towards the closed-ended form.
However, there are still more
changes investors would like to
see. Simon Moore, head of research
at BestInvest, says there is still
reluctance on the part of board
directors to meet shareholders. As
a result, he says, they don’t know
what shareholders want: “There
has to be better dialogue,” he added.
Peters says: “We have been
critical of boards, but some are
better than others. Some still don’t
add a huge amount of value. Trust
corporate actions typically occur at
moments of weakness.”
There are still myriad
improvements that could be made
to investment trusts: boards are
not always receptive to investor
demand, poor performance still
persists on some trusts and good
management is far from universal.
Investment trusts have been forced
into a modern era, and some aren’t
there yet. Nevertheless, they’ve
come a long way, baby.
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