Under new management: how change can be good for investment trusts

Change isn’t always for the better, but recently funds opting for new stewards have profited from the move, says Max King

When Queen Victoria told her prime minister, Lord Salisbury, that the people were crying out for change, he is reputed to have replied: “Change, your majesty? Aren’t things bad enough already?” Change is not always for the better, so when directors of investment trusts change their investment manager, it doesn’t necessarily work out well.

After persistently poor performance or the departure of the nominated fund manager, the directors simply used to ask the management company to come up with a new team. In recent years, they have conducted what is known as a “beauty parade”, inviting other managers to pitch for the contract. Investors are often offered a cash exit at close to net asset value (NAV) but if the new team is well-regarded, few will exit and there will be plenty of new buyers to take their place.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.