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Morningstar slams Alliance Trust over investment trust transparency

Morningstar has criticised the £2.8bn Alliance Trust investment trust over a lack of holdings disclosure.

In its report, Investment Trusts: Why Transparency Matters, published today, Morningstar says while the full list of portfolio holdings is available on the Alliance Trust website, no detail is given in regard to the size of positions or how much the trust is invested across seven funds within Alliance Trust Investments’ fund range.

It highlights that Alliance Trust’s annual report and monthly factsheets do not separate Japan from Asia in its geographic split.

Morningstar concludes: “This lack of detail makes it impossible for investors in the trust to understand exactly how their money is being invested and therefore the risks to which they are exposed, as the company does not disclose full details of its holdings, with weightings, even once a year.

“Shareholders may also not be comfortable with such hefty ownership of the firm’s open-end fund range.”

The report reveals that around 80 funds are still not releasing a full portfolio listing at least once a year, accounting for £16bn in assets.

The ratings agency says full holdings are necessary for advisers to carry out fund comparisons between open-ended funds and investment trusts.

It says: “For investment trusts to truly compete alongside open-end peers, they need to be much more transparent.”

It says ideally full portfolio holdings should be published monthly, however quarterly would be sufficient.

The report says: “If a portfolio contains an investment trust that discloses its full holdings just once a year, they could be looking at stale data and find it hard to get an accurate account of where a client’s current exposure lies.”

Alliance Trust was unavailable for comment at the time of writing.

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