Interactive Investor

Baillie Gifford and Troy win investment trust mandates

21st September 2020 09:52

Hannah Smith from interactive investor


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Baillie Gifford China Growth trust will follow a best ideas strategy, while Troy takes over Securities Trust of Scotland.

Baillie Gifford and Troy Asset Management have both been appointed to new investment trust mandates.

Scottish asset manager Baillie Gifford has taken over what was the Witan Pacific (LSE:WPC). Renamed the Baillie Gifford China Growth trust, it will follow a best ideas strategy, with a focused portfolio of between 40 and 80 Chinese companies. This will include both listed and unlisted stocks from across the market-cap spectrum. 

The £236 million trust will be managed by Sophie Earnshaw and Roderick Snell on Baillie Gifford’s emerging markets team. The pair together manage the open-ended Baillie Gifford China fund, while Snell also runs the Baillie Gifford Pacific and is deputy on the Pacific Horizon (LSE:PHI). The China fund has been a top-quartile performer over every recent time period, returning 55% over three years and 202% over five years, according to data from FE Analytics. 

Baillie Gifford has nearly £45 billion invested in China through its suite of funds and investment trusts, and also has a local presence with a research centre in Shanghai.
 “The Baillie Gifford China Growth trust sits snugly within our retail offering alongside the successful open-ended Baillie Gifford China fund,” says James Budden, the group’s director of retail marketing.

 “We believe the realignment of the portfolio from Witan Pacific’s Pan Asia mandate to invest in our best Chinese growth ideas together with Baillie Gifford’s access to private companies should enhance the appeal of the trust and attract new investors over time.

“As a firm, we see China as a compelling opportunity and a region that increasingly cultivates great companies with incredible franchises domestically and internationally. Our newest trust gives another option to those investors keen to allocate directly to Chinese equities.”

Troy takes over Securities Trust of Scotland

Meanwhile, as of October, Securities Trust of Scotland (LSE:STS) has appointed Troy as its new manager in place of Martin Currie. There will be no change to the trust’s investment objective, which is to achieve rising income and long-term capital growth through investing in a balanced portfolio of global shares. 

The trust will be managed by James Harries, supported by Tomasz Boniek and the wider Troy team. Harries has a long track record in managing global equity income portfolios, including the BNY Mellon Global Income fund, before he joined Troy in 2016 to run its Global Income fund.

On the Securities Trust of Scotland, Harries will look for quality income-producing companies that can also grow strongly, backed by excellent management teams. The high-conviction, low turnover portfolio will typically hold 30 to 50 stocks. 

The new manager will bring in a discount control mechanism designed to protect shareholders from the trust trading at a discount to net asset value (NAV). The trust will buy back shares if they move to a discount. 

Harries will not use options to generate income of the fund, he will rely on natural dividend payouts from companies, so the dividend payment on the trust for the year to 31 March 2021 is being revised down to a “more sustainable level” of at least 5.5p. The total dividend for the year ending 31 March 2020 was 6.41p. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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