A group of prominent Edinburgh financiers have lost more than £80 million because their favoured investment vehicle made a big bet on sectors that have been worst affected by the credit crunch, writes Ian Fraser.
The Independent Investment Trust is managed by well-known stock picker Max Ward, who launched the fund in 2000 after he retired as chief investment officer at Baillie Gifford.
Its value peaked at more than £224m in April, but it has since crashed by some 40% to just £140m.
Investors who have lost money include Alastair Salvesen, Douglas McDougall and Sir Angus Grossart.
Ward’s favourite sectors — banks, housebuilders and retailers — have turned out to be among the worst casualties of the credit crunch. The share prices of many firms in these sectors have collapsed.
The situation was exacerbated by Independent’s decision to buy further into financial stocks in April and May, before their recent falls.
In an interim report in July, the investment trust said: “The UK banks continue to appeal to us for their combination of yield and statistical cheapness.”
John Moore, director of investment trusts at stockbrokers and wealth managers Bell Lawrie, said: “They’ve been absolutely crucified because of their commitment to retailers like SCS and Land of Leather.”
This article was published in The Sunday Times on 23 December 2007
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