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Winterflood: Alliance Trust is ‘work in progress’


Alliance Trust has been labelled a “work in progress” by Winterflood Investment Trusts, following its recently announced restructure and deal with Aviva Investors.

The investment trust announced earlier this year that it was to merge its regional equity portfolios into one global portfolio under head of equities Ilario di Bon.

Head of research at Winterflood, Simon Elliott, says: “Alliance Trust is a work in progress. The decision to adopt a global equity investment approach reflects that. Despite the rhetoric, performance remains an issue for the fund.

“It will be interesting to see how the two engines in the portfolio mesh following the reorganisation and how the London and Dundee teams interact.

“Income remains an important part of the fund’s offering and we suspect the allocation to the bond team will be increased to reduce pressure on the equity portfolio.”

The partnership with Aviva, which will see Alliance Trust acquire its socially responsible investing team and manage funds for the asset manager was described as “interesting” by Elliott, but he is unclear as to the benefits.

Alliance Trust managing director Ed Troughton said the deal, due to complete at the end of the month, underlined its future growth strategy of “focusing on global equities and fixed income with an emphasis on specialist investment opportunities”.

The restructure of the investment business has seen the departure of eight investment professionals, with seven regional income specialists remaining at its London office.

Elliot says: “The ambitions for the investment business have been reined in, given the difficult investment environment.

“Alliance Trust’s Katherine Garrett-Cox declined to give a figure of external funds at which the investment business breaks even, although we can assume that it is still some way off.”

According to Winterflood, platform Alliance Trust Savings saw a £900,000 loss during the first six months of the year but is expected to be profitable on a monthly basis by the end of the year. Meanwhile, Alliance Trust Investments had external assets under management of £151m and costs of £4m during the first half.

Earlier this year, Winterflood urged investors to make a “hasty exit” from the investment trust after reporting “dull” full-year results.


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