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Analyst recommends exit from Pacific trust

A leading investment analyst thinks investors should switch out of the F&C Pacific trust following its takeover by Witan.

Close Wins analyst Charles Cade says the move to Witan was inevitable, given the trust’s poor performance at F&C despite several changes of manager.

But he thinks establishing a dual management structure with Aberdeen and Nomura was far less obvious. He also questions the tender arrangements, which will force F&C to continue managing the trust for two months when it could have transferred immediately under different terms.

Aberdeen and Nomura will assume responsibility for asset allocation and gearing. While Cade says they have strong credentials, he thinks the Far East including Japan mandate is risky as both regions need to be in favour at the same time before such funds appeal to investors.

He says most private-client allocation groups prefer to make the choice between areas themselves.

Cade cites the fall in F&C Pacific’s share price following the transfer announcement as evidence that the deal could have been better structured for the benefit of shareholders.

Cade says: “In our view, there is a strong argument to switch out of F&C Pacific and into separate Japanese and Far East excluding Japan investment trusts.”

Chelsea Financial Services managing director Darius McDermott says: “I share Cade’s view in the short term but if that is the asset class that investors want to be in and they are happy with the new management, it is worth bearing with the trouble in the short term.”

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