* Garrett-Cox will remain CEO of Alliance Trust Investments
* Group to focus on global equities, sell non-core assets
* Trust may consider external managers if performance lags (Adds comment from chair, detail, updates share price)
By Nishant Kumar and Matt Scuffham
LONDON, Oct 1 (Reuters) - Katherine Garrett-Cox, one of theCity of London's most high profile women CEOs, is to step downfrom the board of Alliance Trust in an overhaul of thefund manager which has faced pressure from activist investorElliott to make changes.
Garrett-Cox, who will continue as chief executive ofAlliance Trust Investments, has long been battling demands fromshareholders to tackle the fund's underperformance and the gapbetween its shares and the value of the assets it holds.
The 127-year old trust, with total assets of 3.3 billionpounds ($5 billion), said on Thursday it planned to sellnon-core investments, including its fixed income, mineral rightsand property assets, and cut costs to produce savings of 6million pounds next year. It plans to make its board fullyindependent, consisting solely of non-executive directors.
Chairman Karin Forseke dismissed suggestions by shareholderadvisory group ShareSoc that the changes may not be enough tosatisfy Elliott, which has a 14 percent stake in Alliance Trust.
"This is not the thin end of the wedge," Forseke toldReuters, adding that the changes had been made in consultationwith all of the trust's investors, including its 70 percentretail shareholder base.
"We have looked at every possibility, there have been nosacred cows in this organisation."
Elliott declined to comment.
The group will create separate boards for its fundmanagement division Alliance Trust Investments and its AllianceTrust Savings business to increase accountability.
The trust will aim to implement its cost cuts by end of2016. Forseke said the cost-saving programme would lead to jobcuts, without specifying a number.
Alliance Trust will adopt the MSCI All Country World Indexas its benchmark and aim to outperform it by at least 1 percentper annum after fees.
It said if its performance does not consistently deliveragainst a new benchmark, it will begin a full review andconsider external managers.
"We see this as step one in an evolutionary process," RogerLawson, deputy chairman of shareholder advisory group ShareSocsaid in a statement.
"But it is not clear that these changes will quickly makethe Trust more attractive to investors, or ensure that ElliottAdvisors do not come back with more demands for changes in the future."
Forseke declined to say whether Garrett-Cox's pay woulddrop, but said the trust's remuneration committee would take theplanned changes into consideration.
"It is not quite clear where the changes will leaveKatherine Garrett-Cox in the long term. Her influence over theboard has been significantly reduced," Charles Cade, analyst atNumis said.
The overhaul follows a campaign by Elliott Advisors earlierthis year to improve the fund group's performance and reduce itsdiscount to net asset value.
Alliance Trust had agreed a ceasefire in April with Elliot,its largest individual shareholder, agreeing to revamp its boardby appointing two of the three directors backed by Elliot.
The group's shares rose more than 2 percent to 468 pence at1447 GMT, narrowing the discount to its net asset value buttrimming gains from an earlier 4 percent rise.
Before the announcement, the shares traded about 12.4percent below its net assets. That compared with 4.9 percent forits peers, which include Scottish Mortgage and F&C InvestmentTrust, data from trade body AIC showed.($1 = 0.6601 pounds) (Additional reporting by Carolyn Cohn; Editing by JaneMerriman)
