Alliance Trust boss to leave board in shake-up

Additionally independent boards will be created for Alliance Trusts Investments (ATI) and Alliance Trust Savings (ATS) to increase focus and accountability and ensure the necessary separation of shareholder and investment manager interest.

The move comes as the Dundee-based trust said it was seeking to cut costs by about £6 million a year through a shake-up to its structure.

Alliance said its PLC board is to become “fully independent” and comprise exclusively non-executive directors.

“This simplification of the trust will give greater clarity to its investment proposition”, the company said in a statement.

Alliance Trust’s (LON:ATST) high profile boss Katherine Garrett-Cox is to step down from the 127-year old investment company’s main board after another top level shake-up.

Alliance Trust said the changes are meant to take effect “as soon as practicable” but no later than March 1 2016, subject to ATI obtaining relevant regulatory permissions under the AIFM Directive.

The board is also targeting £6m of cost savings for 2016, to make ATI profitable by the end of next year.

The board says it considering outsourcing the management of the trust to an external asset manager and is open to this option in the future, with ATI having a six month notice period for its contract.

Under the terms of the new Investment Management Agreement, the trust will be charged 35bps on average net assets (excluding the investments in ATI and ATS).

It added that while it was confident in the ability of the team to deliver returns the board planned to establish a management engagement committee, to be chaired by recently appointed non-executive director Karl Sternberg, to review investment performance regularly.

The trust is now sitting on a discount of 11.7% and the board said it was committed to narrow this to single figures.

Karin Forseke, the company’s chair, said: “In the run-up to our annual meeting, many of our shareholders indicated that they sought change.The actions announced today, taken together, represent a few of the biggest changes in our history and are created to further improve shareholder value”.

As part of its new dividend policy, the trust will charge two-thirds of administrative charges from the capital account rather than the revenue account, which will help to boost income.

The trust’s assets will also be managed by subsidiary Alliance Trust Investments within a strict new costs envelope of 35 basis points, one of the lowest in the industry.

After a “disappointing” first half to the year, she said the board was “actively engaged in addressing” shareholder concerns.