LONDON (Alliance News) - FTSE 250-listed investment trust Alliance Trust PLC announced a series of sweeping changes to its investment strategy, dividend policy and board on Thursday, changes which come in the wake of the sustained public spat between the company and activist investor Elliott Advisors.
The trust said it will change its investment mandate to focus on global equities and will dispose of non-core investments. It will also award its investment mandate to Alliance Trust Investments at a fee rate of 35 basis points on average net asset value, which it said is among the lowest in the industry. It will also introduce the MSCI All Country World Index as a formal benchmark for its performance.
Beyond the mandate change, the trust said it will cut costs, with a target of reducing its ongoing charges ratio to 45 basis points or less by the end of 2016, from 60 basis points now, along with a wider cost reduction programme across the business, which will deliver savings of GBP6.0 million for 2016.
The trust has also made a commitment to narrow its discount to its net asset value and improved its investment performance, along with a commitment to use share buybacks, as required, to narrow the discount into single figures. It will also ensure its maintains a progressive dividend policy and will pay all of its net income out as ordinary dividends to shareholders.
Further, Alliance Trust said it will simplify its structure and will move to a board consisting solely of non-executive directors, which will mean Chief Executive Katherine Garrett-Cox will step down from the board, though will remain as the trust's CEO. As part of the structural changes, Alliance Trust will also create independent boards for Alliance Trust Investments and Alliance Trust Savings to increase focus and accountability.
Alliance Trust said the changes had been made following "a period of extensive consultation with a wide range of shareholders", which is likely to have included Elliott, which came after Alliance Trust in the first half, criticising its performance and calling for changes and forcing the trust to defend its performance against peers.
News of the changes sent Alliance Trust shares higher in early trade on Thursday, up 4.0% to 476.30 pence, one of the best performers in the FTSE 250.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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