View more on these topics

Make a hasty exit from Alliance Trust, says Winterflood

Winterflood Investment Trusts has voiced its concern over Alliance Trust’s “dull” full-year results, urging investors to make a hasty exit.

Simon Elliott
Simon Elliott

Simon Elliott, head of research at Winterflood, says net asset value (NAV) has increased by just 66%, compared with 85% of the FTSE All Share index and 79% for the FTSE World ex-UK index.

He says: “Alliance Trust continues to disappoint. Investment performance is, at best, dull and, in our view, made less attractive by considerable style drift.

“This fund was once characterised by its conservative investment approach which protected shareholders’ funds in difficult markets.

“This is no longer true as evidenced by the fund’s struggles in the second half of last year while outperforming year‐to‐date. We believe that this is a function of the considerable change in investment personnel at Alliance over the last few years.”

The head of research says both Alliance Trust Savings and Alliance Trust Investments continue to lose money, having shelled out £50m and £10m, respectively, in accumulated losses. (article continues below)

Elliott says he regards the loss-making subsidiaries as a “jam tomorrow story”, adding that investors would have to make “herculean assumptions before it starts to make a meaningful contribution to the fund’s income account or NAV”.

In a similar vein, though Alliance Trust Investments permits the recruitment of new investment managers with the promise of seeding funds, “it would need to grow 20x before being profitable”, says Elliott.

He adds: “When the buyback policy was introduced last year the stated intention was to move the fund’s discount in line with its peers.

“However the intention now appears to be more focused on reducing discount volatility. Consequently, it would appear that the chances of the discount narrowing materially from here are slim.

“Against this backdrop we would suggest that shareholders take advantage of the buyback policy, while it lasts, to make a hasty exit. There are other, far more attractive, investment trusts available.”

Recommended

AIC publishes guide on portfolio holdings disclosure

The Association of Investment Companies has issued a new guide for members about the disclosure of portfolio holdings post-RDR. The guide calls on members to consider whether they should release full portfolio holdings. For boards which choose to release this information, it makes suggestions on how frequently and quickly this information might be released. The […]

8

Govt agrees to FCA duty to provide access to financial services

The Financial Conduct Authority will have a duty to ensure consumers have access to financial services under a Government amendment to the Financial Services bill. At the report stage of the bill in the House of Lords yesterday, the Government bowed to pressure from Labour to take account of the availability of services. At committee […]

1

RLAM reports 28% fall in net new business inflows

Royal London Asset Management reported a 17 per cent increase in assets under management during the nine months to 30 September, despite a 28 per cent drop in net new business inflows. Assets under management increased from £39.7bn in 2011 to £46.6bn this year. Net new business inflows were down from £218m last year to […]

2

Pritchard Stockbrokers enters special administration regime

The FSA has confirmed that Pritchard Stockbrokers has entered the special administration regime and Timothy Ball, Roderick Weston and Alistair Wood at Mazars LLP have been appointed joint special administrators.   Last month, Merchant Capital appointed Reyker Securities to handle client monies in its structured products division to replace Pritchard Stockbrokers after it was suspended […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment