The £2.12bn portfolio has underperformed its FTSE All-World benchmark over a three, five and ten year period, with more volatility.
Laxey Partners, who have a major stake in the portfolio, will call for the trust’s board to determine how both investment performance and the discount to NAV can be improved.
“The possibility of externalising the fund’s investment management and bring forward proposals that would enable shareholders who wish to sell to exit at a share price that ‘more closely reflects net asset value’ will also be discussed,” said analyst Simon Elliot.
Performance of trust versus benchmark
| Name | 1yr (%) | 3yr (%) | 5yr (%) | 10yr (%) |
| Alliance Trust | 0.91 | 45.46 | 12.01 | 56.06 |
| FTSE All-World Index | -1.17 | 54.59 | 24.13 | 62.59 |
Source: FE Analytics
As part of its campaign, Laxey has pointed out various other issues affecting Alliance Trust’s ailing performance, including an ineffective buyback campaign and a rising cost base. Asked if these criticisms were justified Elliot replied:
“Probably. Performance remains dull at best and, as we have commented recently, there is evidence of a substantial style drift.”
“In addition, despite an extensive buyback programme, the discount remains in the mid-teens, substantially wider than its peers. Furthermore, the recent revelation that the investment subsidiary will have to attract third party funds of £2.5bn to break-even, compared with £125m at present, has been greeted with incredulity by many shareholders.”
Rumours are already circulating that Aberdeen Asset Management could be involved in a takeover, in a bid to turn performance around.
“Martin Gilbert’s carefully worded comments in the Daily Telegraph have inevitably led to speculation that Aberdeen AM could be involved,” said Elliot. “No doubt other fund management groups would look to ‘throw their hat into the ring’ if an opportunity presented itself.”
“Where this would leave the rest of Alliance Trust’s business remains to be seen.”