PROPOSALS to strengthen the investment trust sector by merging 10 general investment trusts into one £8 billion “super-Scottish” trust have been dismissed as folly by leading investment experts.
The plans have been floated by Advance UK, a £60 million investment trust which is a fraction of the size of the funds it is seeking to consolidate.
Advance is initially seeking a merger of the two Dundee-based Alliance Trusts before bolting on other trusts including Monks and Scottish Mortgage, Edinburgh Investment Trust, Murray International and Scottish Investment Trust. Most have assets well in excess of £1bn.
But Ian Rushbrook, manager of Edinburgh-based Personal Assets Trust, said: “This is a case of clear insanity. These are independent quoted companies, which are all pursuing very different strategies towards their objective of making money for their shareholders. Why tear it all up? Advance seems to believe if you rattle the cage enough, something is bound to give. But they are wrong. This just will not happen.”
James Carthew, investment director at Progressive Asset Management, which manages the Advance UK fund, is confident the Alliance Trusts could be the first trusts to bury their differences and will meet their chief executive, Gavin Suggett informally in London this week. So far he has received “holding” replies from seven of the 10 relevant trust chairmen.
Carthew said the mega trust — to be called Scottish Alliance — would help eliminate discounts, a problem which has dogged the investment trust sector for years, as well as create greater liquidity.
Lord Younger, ex-chairman of Royal Bank of Scotland, who chairs Murray International, said: “This is something we will be discussing at our next board meeting in early February. It’s too early to say what our response will be.”
This article was published in the Sunday Herald on 20 January 2002