European Investment Trust sacks fund firm, hires Baillie Gifford

by Kyle Caldwell from Money Observer |

The board of The European Investment Trust said a new investment approach was needed to improve performance for current shareholders and to attract new investors.

Patience has finally run out with the board of The European Investment Trust (LSE:EUT), which has wielded the axe on Edinburgh Partners and appointed Baillie Gifford as the new management group to run the trust.  

In a stock exchange announcement this morning (10 October), the board of The European Investment Trust said a new investment approach was needed to improve performance for current shareholders and to attract new investors. It pointed out that since Edinburgh Partners were appointed in February 2010, The European Investment Trust had underperformed its benchmark – FTSE All-World Europe ex UK Index – over both three - and five-year time periods.

The management style will change, moving away from a value approach to a growth focus. The trust will be renamed Baillie Gifford European Growth Trust (BGEU) and will be managed by Stephen Paice and Moritz Sitte, who both manage the open-ended Baillie Gifford European fund. The managers will target high-quality companies with strong competitive positions which they believe have the prospect of delivering strong earnings growth over a number of years.

Other changes will see dividend payments moving from twice a year to an annual payment, while there's also scope in the future for the trust to include unlisted investments, up to a 10% limit.

In an announcement to shareholders the board said: "It is the board's view, after consultation with its largest shareholders and advisers, that these changes provide the scope for improved long-term performance and should enhance the appeal of the Company. With the support of Baillie Gifford, the aim will be to attract new investors and, over time, seek to achieve a narrowing of the Company's discount.

Baillie Gifford's appointment is expected to be completed in three months' time, subject to shareholder approval at its general annual meeting on 23 January. 

Last year Baillie Gifford was handed the former Schroder UK Growth trust, which is now called Baillie Gifford UK Growth (LSE:BGUK). There have been a couple of other high-profile sackings over the past couple of years, including Alliance Trust, which sacked its in-house management group when it switched from a single manager and a socially responsible investment focus to a multi-manager approach. Since April 2017 it has been managed by Willis Towers Watson.

Elsewhere, earlier this week it was announced that fund manager Alexander Darwall will be bringing his European investment trust with him to his new investment company, Devon Equity Management. The trust's board announced that it will end its contract with its current fund management company Jupiter in November.

In the coming weeks and months there could be other high-profile management changes, with the board of Woodford Patient Capital Trust (LSE:WPCT) considering Neil Woodford's future, while Jupiter UK Growth (LSE:JUKG) is also mulling the possibility of replacing the trust's manager Steve Davies with someone from outside Jupiter.

This article was originally published in our sister magazine Money Observer. Click here to subscribe.

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