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MM Profile: Andrew Bell on a bright future for investment trusts

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The new chairman of the AIC and chief executive of the Witan Investment Trust explains how an aptitude test put him on the road to a career in finance

Andrew Bell 480

It is hard to imagine that someone with as impressive a career as new chairman of the AIC and chief executive of the Witan Investment Trust Andrew Bell would describe a basic aptitude test as his career-changing moment.

Bell reflects on his early career when, working for Shell in Oman, he sat an aptitude test intended for the local workforce, only to be told the results clearly showed he should be working

in finance.

Bell says Shell was one of the glamour industries of the 1970s and he was “cruising along” at this point.

He says: “We were trying to conduct aptitude tests for local employees, many of whom did not have any formal education. They carried out the tests on some of us beforehand and, looking over my results, someone asked what was

I doing working for Shell - I should in finance.”

This event sparked rapid changes for Bell. He sponsored himself on the Sloan Fellowship at London Business School as a fast-track to a career in the City. He even had to fly to the alumnus of the LBS in Riyadh for his interview.

Although giving up his life in Oman appears a snap decision, Bell says it is one that he had thoroughly planned in his mind.

He says: “The Sloan Fellowship is an MBA condensed into one year, so it is intensive but I was motivated to do it and also well placed because I had 10 years of employment behind me. Some of the things they teach at business school make much more sense with experience than if you are straight out of university at 21.”

Bell’s fast-track approach continued into his first job on the sales side of equity broking. He describes this as the most “Darwinian” part of the city, which is where he needed to be to get ahead fast.

He says:”I thought because I was coming into the city 10 years later than anyone else, I had to go into the part of the city that was the most Darwinian. In broking, it is high risk but you find out quickly if you are capable. I did not want to find myself at 40 doing the jobs that other people had when they were 28.”

Fast forward to his current role as chairman of the AIC and chief executive of the Witan Investment Trust as well as being a non-executive director of the Henderson High Income trust and Bell is now more comfortable taking the long- term approach to investment ideas as opposed to what he calls the”short-term noise”.

He looks to Warren Buffett who is quoted saying: “the stockmarket is a voting machine in the short term and a weighing machine in the long term.”

This long-term focus filters through Bell’s roles at Witan Investment Trust and the AIC. At Witan, Bell describes the underlying approach to selecting fund managers which they hope to stay with over multiple economic cycles.

Taking a broader view of the industry, Bell is also pleased at the current outlook for investment trusts following the RDR.

He says: “It has not been easy in the past for investment companies to compete on a level with unit trusts because they used to be able to take commission.

“Now you have an environment where it is easier for advisers to make an unbiased decision between open-end or closed-end fund.”

The AIC is currently working on training for advisers to ensure they are fully aware of some of the changes and benefits to investment trusts post- RDR. Bell points out that investment companies also have a responsibility to make their approach both transparent and informative enough to engage with advisers.

He says: “Trusts have to put across their investment approach more clearly as more of a marketing document for advisers rather than some sort of pompous annual tome.”

He says communication is particularly important when it comes to an investment trust’s approach to gearing. Bell acknowledges that advisers’ lack of understanding surrounding the concept of gearing has perhaps held them back from investment trusts the past but he hopes that the RDR will have helped to clarify the potential benefits of gearing for both the trust and advisers.

He says: “It can be difficult communicating an investment company’s gearing policy because it can cut both ways. What we hope

is to have more propulsion on the upside and have less downside effect from gearing. It would be good to demonstrate gearing as something that adds value to the trust.”

Given the rather sunny outlook for investment trusts in the world of many RDR-related headaches, you could argue that Bell has landed his role at the AIC at the perfect time, given that he only took over from Sarah Bates at the end

of January.

Looking to the year ahead, Bell’s first big event as chairman is the AIC annual conference for directors in early March, which falls in line with another not so welcome piece of regulation from the AIFM.

The AIFM Directive contains new legislation due to be passed to the UK this year and investment companies have a year to implement it.

Bell explains that the AIFM Directive is a European-driven piece of regulation mainly dealing with who is allowed to run investment funds, what corporate structure a trust takes and what risk controls they have in place.

Bell says most people seem to feel that the AIFMD is “well meaning but redundant because a lot of what already happens in the industry in terms of board structure and risk actually gives the protection which this legislation is intended to do”.

“There is a feeling that this could well fall into the category of making our job slightly more tedious to do what we do already,” he says.

 

Andrew Bell

Born: Bristol

Lives: a small village near Woburn

Education: Catholic and Protestant missionary school in Bahrain, prep school in Speyside and grammar school in Yorkshire. Oxford Univesity - Politics and Economics

Career: 2013: AIC, chairman; 2010-present: Witan Investment, chief executive; 2000-2010: Rensburgh Sheppards Investment Management Limited, head of research and strategy; 1987-2000: BZW, Investment Trusts team co-head and Credit Suisse First Boston; 1970s: Shell, Oman.

Likes: Skiing, tennis.

Dislikes: Rain

Drives: Mercedes CLS

Book: The Lord of the Rings by J.R.R. Tolkien

Film: Gone with the Wind, ‘Frankly my dear I don’t give a damn’, always brings a tear.

Album: David Oistrakh’s recording of the Beethoven violin concerto

Career ambition: To have a successful 10 year run at Witan, that would change its perception in the eyes of investors.

Life ambition: To enjoy 40 years of retirement as much as I have enjoyed 40 years of work.

If I wasn’t doing this I would be…Travelling in Africa or somewhere in the Far East, with a month or two skiing. It may be considered sad, but I would still want to be involved managing investment. Fortunately, you can get computer access in Acapulco nowadays.

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