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Garrett-Cox: our new-found conviction at Alliance Trust

Katherine Garrett-Cox, chief executive of Alliance, says she is excited to be transforming the investment trust into a global fund of best ideas.

Garrett-Cox: our new-found conviction at Alliance Trust

When Alliance Trust was challenged by activist investor Laxey Partners earlier in the year shareholders came out in force to vote down the proposals.

Now investors will be eager to see the outcome of Alliance’s proposed shake up, as it drastically reduces its holdings by half and scraps its regional portfolios.

Katherine Garrett-Cox, chief executive of Alliance Trust, says the trust will be much less weighted in the UK and more focused on the US in technology and oil services.

The trust’s holdings will be reduced from 200 to under 100 holdings and rather than focusing on regional portfolios, the holdings will be centrally managed. 

The £2.1 billion trust has a record of 45 years of increasing its dividends and is considering paying dividends out of realised capital gains, as proposed by Laxey Partners and under new tax changes made earlier in the year.

Garrett-Cox said: ‘The trust has been rebuilding dividend reserves and putting money back in the kitty and investing in companies that have the power to grow.

‘A more prudent way of looking at things is the probably the preferred way of doing things. The key thing for us is we want to be sure that we can keep paying the dividends for a very long time.’

Shares are currently trading at 375p, a 15% discount to their NAV value of 442p per share.

However the trust has previously traded on a 19% discount and Garrett-Cox says share buy-backs have succeeded in stemming discount volatility. The trust has bought about 5% of shares back this year.

The trust’s performance is also picking up with total returns of 22% from its investment portfolio over the past year, which just beats the FTSE All Share's total return of 21%.

7 comments so far. Why not have your say?

Patrick Napier

Oct 11, 2012 at 12:31

I'm so glad that Alliance Trust is doing this. This shakeup is long overdue. Perhaps they will now start training their staff so that customers are also treated as customers and given due respect and consideration.

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John Coles

Oct 11, 2012 at 13:37

What a dreadful waffler this woman is, she really said very little other than to blame the market for the absurdly high discount on Alliance Trust.

""Perhaps they will now start training their staff so that customers are also treated as customers and given due respect and consideration.""

Could not agree more, Patrick Napier.

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Francis Wilkinson

Oct 11, 2012 at 14:38

They seem to have lost their way-suddenly selling half your portfolio and then buying aggressively new shares over a fairly short period of time speaks more of panic than prudence.

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Camber

Oct 11, 2012 at 15:22

Still flapping around to trying find a style,and policy

buy backs non existent since they bought back all of Laxeys shares so should we have believed her when she said she understood the benfits of buy backs ore was that all rubbish and a simply a response for LAxey until they left. Long term shareholders deserve better. It should be managed by Aberdeen Asset Managers

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Keith Cobby

Oct 11, 2012 at 15:34

The reason investment trusts like Alliance have been around for such a long time is that they embrace change. Otherwise they would still be stuffed with railway holdings or have gone out of business.

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Mickey

Oct 11, 2012 at 16:55

Alliance is a dog, plenty better IT's around than this one, you might want to hold it as a discount to nav play or because if you hold it you can get a cheaper dealing charge on other trades.

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john_r

Oct 12, 2012 at 13:25

It does seem that recent performance has improved putting AT into the the top 50% of Global Growth IT's over 1 year NAV performance. For me though its too little, too late. Too many years of mediocre performance and increasing charges leave me unimpressed and now with Sippdeal currently offering to pay my transfer charges I have enough impetus to sell off my AT equity holding as well as ditching the Alliance Trust broker platform. A change of management may have kept my hopes alive but new rhetoric isn't nearly enough to keep me onside. Goodbye AT.

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