Alliance Trust is finally getting its act together

Alliance is finally doing what it should have been doing for the last 20 years – offering low-cost, high-conviction and well diversified investment for the masses.


We've been complaining here about Dundee-based Alliance Trust for years. It's charges have been too high; it has had an utterly unfocused investment strategy; it has been distracted by marginal businesses (a fund management business and a retail platform); and it has had a board wedded to the status quo and a horribly overpaid CEO.

I did at one point think that getting Katherine Garrett-Cox in to take charge would sort things out, but this turned out to be more wishful thinking on my part than anything else. So I'm afraid that a few years ago I lost interest in the company completely.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

There are good trusts out there run by good managers who get markets and understand that costs count. So there is no need for us to keep mooning around the lousy ones just because they have romantic histories (Alliance was incorporated in 1888 to invest the money that Dundee's grandees had made in the jute industry).

However, things can change. And it looks like they may now be doing just that at Alliance. The fund management business (Alliance Trust Investment) is being sold to Liontrust. The platform business (Alliance Trust Savings ATS) is staying, but is now (finally) profitable. And the core business of the investment trust investing in global stockmarkets is finally to be taken seriously.

Advertisement - Article continues below

Last month the board announced a new investment approach. It is become, effectively, a multi-manager fund and has just announced a starting line up of eight managers (chosen by Willis Towers Watson) known for their stock-picking skills.

Thanks to the scale of both Alliance and WTW, says Alan Brierley of Canaccord Ingenuity, this will mean that investors should get "relatively low-cost access to the best ideas of a highly focused and complementary list of global equity managers; a look-through portfolio of c200 holdings will reflect the best ideas of these leading managers".

"Low cost" in this context means an overall annual cost of about 0.60% which is not bad at all. This is exactly what Alliance should have been doing for the last 20 years low cost but high conviction and well diversified investment for the masses. Still, better late than never.

Brierley now rates the shares a buy and I am adding them to the long list for possible consideration for the MoneyWeek investment trust portfolio.




Why investment trusts are the best vehicle for your money

Max King explains the advantages of investment trusts – sometimes called closed-ended funds – over their open-ended counterparts (or Oeics).
11 Feb 2020

Investment trusts: the Cinderella of investment arrives at the ball

Investors should look beyond the market noise of a single year and examine the bigger picture. Max King explains what we can learn from 25 years of in…
8 Jan 2020
Personal finance

The benefits of sitting tight with your savings

Agreeing to lock up your cash can boost the interest rate on your savings significantly. Ruth Jackson-Kirby reports.
20 Aug 2019
Stock markets

Seven investment trusts to make your investments go global

The outlook for equities remains encouraging. An investment trust with an international remit will help you profit.
23 Jul 2019

Most Popular

House prices

The biggest risk facing the UK housing market right now

For house prices to stagnate or even fall would be healthy for the property market, says John Stepek. But there is a distinct danger that isn't going …
17 Feb 2020

The euro’s slide against the US dollar looks set to continue

The euro has been in a bear market against the US dollar for two years now. And on a broader scale since 2008. A decline like that is telling us somet…
19 Feb 2020
Share tips

Three overlooked stocks to buy now

Each week, a professional investor tells us where he’d put his money. This week: Joe Bauernfreund, portfolio manager at the AVI Global Trust, highligh…
17 Feb 2020

The rare earth metal that won't be a secret for long

SPONSORED CONTENT – You can’t keep a good thing hidden forever; now is the time to consider Pensana Rare Earths and the rare earth metals NdPr.
31 Jan 2020