Learning lessons from board disputes | Investment Trust Edge

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  • 45 mins 10 secs

It is one of the paradoxes of the investment trust industry; Providers are quick to praise the merits of the board but directors themselves are usually very low profile. On the panel to discuss are:

  • Ewan Lovett-Turner, Director, Investment Companies Research, Numis Securities Research
  • Paul Hookway, Senior Fund Analyst, SG Kleinwort Hambros Bank Limited
  • Andrew Lister, Senior Investment Manager, Aberdeen Standard Investments


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It's, one of the paradoxes off the investment trust industry providers, a quick to praise the merits of the board, but the director's themselves are usually incredibly low profile. Well, that's, not the case at invesco. Perpetual enhanced income has been a public spat between the asset manager on the board. What can we learn from it ? And if there are competing interests, what ensures that its creative tension that rules rather than open conflict ? I'm marco, this is investment trust, edge to discuss the topic. I'm joined here on the panel by you and love it. Turner, director of investment companies research. Name a securities pull hook way, senior fund analyst at sg climate hamburgers bank, and andrew lister, senior investment manager at aberdeen standard investments. You will be about investigator perpetual enhanced income. Could you just give us a bit of an overview of what's been going on between the fund manager and the board ? Certainly markets somewhat unusual situation where you've had a public disagreement between the management group on the board, predominantly around fees it's, a bond fund run by invesco's fixed income team, and in may, the fee negotiations broke down, which ended up with invesco resigning from management of the trust the board sort out some quote for a new fund managers receive some of those, but over over time now invesco have been reappointed. A couple of members of board of left on dh. The fees have changed. Fees have been reduced performance for being removed, so it seems to be somewhat businesses usual. But you've had a very unusual sort of disagreement in between pulling away there's a robust debate. Clearly there is between lot supports and trust is a good thing if it's held in public or is it much better if it dealt with by a person ? It should be held behind closed doors, obviously, if his negativity surrounding our trust in the open market called discounts. Widen people lose faith for the trust that's very negative. Longstanding shareholders who rely on that for their wealth keep it behind closed doors. Occasionally they might also views and opinions. Sometimes it can't be contained as you seem invesco it comes out in the open quite spectacular and what's that doing to the share price in the discount to navy has been a noticeable impact of the market has been here, and i think that's one of the reasons it should be it should have been concluded behind closed doors, which is to say that when the when the news first broke resigning as managers, the share price was down about six percent when the news was then released that an agreement had been reached on fees on that investigator would be would remain as the manager of the fund share price was back up not quite as much, but still up meaningful amount on the news, which in itself tells you that the market and investors were quite can't have investigated as the manager disappointment when they announced they were resigning and appreciation when they announced that they would still be the manager, but the long and short being that that's volatility that could have been avoided on dh presumably investors will have been trading around of the news, which could have been to some investors benefit, but to the detriment of others. Is it the market telling us something, or is that market maven makers moving prices around, making an assumption about ? I would say, i always say a combination of both probably the market makers in the first did since then you're reading headlines about funds with perceived problems in in terms of the relationship between border manager. A lot of retail investors, for example, could take that negative. I don't think there was a huge amount of volume traded in in the interim period, but a say that volatility could have bean avoided grant and in fact a fun trading, a substantial premium in the first place tells you that investorsbuying larger, pretty happy with performance and happy with the fee structure. I want to see if there was a general points from this specific situation we can tease out rather focus purely on the trust itself, so pull away. Part of this seems to be about the fee structure on the fees coming down. How reasonable that did the fees. Look on the trust. Originally with a half the course. How do they look now ? I mean, i think that probably kind of ok, perhaps the issue is a performance fake it's. Always a bit of a negative for us. And it's gone, right ? So i think it's if you compare it to other similar investment trust and it was kind of in the ballpark officer there's continuing pressure on fees that managers charge on, certainly with me for two coming in much more transparency on cost. So, you know, not just have fees, charges you have transactional charges underneath the hood has to get disclosed as well. Suddenly it can be quite eye watering. The cost of also, the only thing you really have control over isn't management. There must be more pressure on that going forward. But you're on the point. I can see boards will want to pressure for managers. It was better if you get the phone management for less. But who's pressuring the board to brush the fund manager, i think the visa on interesting one of these mary, the boards are focused on, and ultimately this has ended. Up being a good outcome for investors, they've gone from a management the blended rate of point nine percent point seven seven they received the reduction there's no performance fee. But the last few years, there's been tremendous pressure on investment companies on the management groups, on the boards to drive boards, particularly to dr lo feeds, the implementation implementation of body are brought into focus that perhaps investment companies didn't have as much of the cost advantage of people thought with headline fees of open ended funds dropping from one and a half two more like point seven five so boards have been spurred on by that over the last few years since started twenty thirteen there's bean two hundred over two hundred, two hundred eighteen changes to management fees on around fifty performance fees removed. So there is pressure from investors to reduce the fees which boards are acting on ? I'm really to ensure that the investment companies stay competitive. This is our other investment products out. You're running a fund of about four hundred million pounds of thunder off investment trust. How much time do you spend thinking about what the management fees are on the trust ? You're investing in it's a good question i would obviously say we spent about the right amount of time, which is which is not a huge amount of time, because i think it is one of those topics that you can become overly obsessed with, you know, i think it's much more important, for example, picking a good manager with an attractive port earlier, i'm paying them a sensible fee, but it is to invest in the fund that is just the cheapest in the market, irrespective of how it's run so it's part of the overall consideration assed paul said it's, one of the only bits you can really dictate you you, khun specified two decimal places exactly what you're gonna say and there aren't many certainties when it when it comes to it, sting, wait, take a pretty balanced approach i mean, they're they're occasions where you have to pipe pay a higher fee than you might like i'm on. The rationale for doing so is because you, you know you're getting something back in return or you're getting a manager with an exceptional track record or you're investing in a specialist area, i mean it's interesting that one area's a market where the reductions haven't really kicked in is in the alternative space, so you're still looking a performance fees relatively high fees there, ondas long as they're generating great returns, then people seemed happy to do that, but for straight vanilla equity where you can get on bye on exchange traded fund very cheaply now, which is obviously a good portion of where the pressure is coming from. You know, you do have to be conscious of of of what you're paying, and we want to pay a fair amount. That fair amount will differ depending on acid class, size of vehicle, the motivations of the manager on such life and you and i suppose we're seeing provocation market institution investors, they used to pain very little for an equity portfolio, so one hundred hundred fifty million pounds didn't bomb portfolio return investors used paying a bit more. We're seeing a big rise in the number of retail investors by investment trusts. Who does the board's typically think their clients big institutions, it's always a balance for border and difficult balance between a big institution investor who could be noisy and it's, often easier to listen. To an institution investor because you can find one face giving a particular view whilst the board's getting getting the opinions of individual investors after investing platforms is quite tricky. But typically the drivers on the sort of feet on the feet side of the equation is generally a line. But between the institution investors and and retail pull another topic with protection, and it was the importance of having access to talented from manages in the case of enhanced income for cause and pull read on greece, davis, they're running a lot of money and open ended vehicles as well. So in a sense, how much exclusive access are you getting to a good manager ? An investment trust if he or she happens to run lots of open ended money at the same time ? It's a good issue ? I think a lot of managers will run very similar strategies and they're open ended as well. They're closing a strategy, then just use an extension over so you might have issues that could have been a strategy. I know that you have to be what mind, very mindful off, but i think that sometimes how they spend the time between the open ended or institutional mandate ? Segregated mandates versus the investment trust. Where there, tom really lies is occasion is an investor. How do you work out when you see a manager ? How do you sort of politely saying how much of your ten hour day you spending on the fund ? The fund i'm planning on investing it s o i probably looked sort of some investment trust. Some open ended a blend off and i think he's, just in the jew diligence you look at that. You asked the question the man next to you, ron, what is this fitting your and your overall sort of part of assets ? How much time did teo deployed to look after it ? It just isn't just a strategy that's rolled out. Or is it something different ? So, it's possible due diligence process. You really have to ask the question we caught up front and the most managers of very used to actually answering that question. It's fairly standard. We're picking up on that there's answering a question well and there's there's answering it truthfully. How do you get through the p r on the spin to find out what the answer is ? Yeah, i think it's difficult, but i think i think there are ways of i don't find it. I mean, my experiences that generally where people run open into money players than money alongside each other. Quite often they have a closed and fund has a special place for them. All fund managers love running closed in funds because of the inherent benefits you have in that semi permanent permanent capital structure have one of the things we would look for is, for example, is the manager invested ? Is the manager invested in the closed and fondle the open ended phone that is usually a good indicator of where they may spend slightly more time ? I think coming back to fees if if the fee in place is higher for the investment company or the trust, and it is for the open ended funds that's another motivating factor as to why you might spend a disproportionately large amount of your time relative toe how important it is to you on the investment trust because you wanted to perform really well. Wait, we're not one of those teams that has a natural aversion against performance fees, because i think, actually where ? There is a performance fee that's, another indicator that actually you have got a very good idea, particularly if it's something that's less liquid that wouldn't fit in the bigger open and it is a natural place to put it in your in your investment trust. So those are the kind of things we look for then a related question would be how do you manage the investment trust differently to the open ended and that's where we tend to get excited is we want to see them using leverage, which is the case here, but you can't always do it open and it funds is is freely. We want to see them taking your mohr more risk if you like, by going into less liquid situations where you should become any liquidity premiere over time, inequities that's usually pushes you towards more smaller midcaps, more volatile asset classes where you can take that long term view that you can't necessarily do in a daily dealing open ended fund, that's got influence an outflow they don't know funnel but they did come out front from what's. Been going on with enhanced income is the length of the notice period for the contract believe that's come down on the investment trust that that's that's being reduced twelve to three months and that is an area where they're particularly equity funds tend to be reasonably short notice periods on the investment trust where you've seen longer notice periods has bean with more specialists, asset classes so having a relatively short notice period, teo allow the board to make a a decision to transition the manager should they should they decide tio with recently standards ? Is there a danger that would encourage short termism on behalf of both aboard and farm manager ? Is that a completely separate issue from the time period over which your success or otherwise of being think that's a bit of a different issue ? I would expect the board still to be assessing their manager over longer time periods on dh, and that is slightly different whilst the ability to change is putting a bit of power in the hands of the board on having incredibly bail t change things, i think the days of long notice period for equity equity investment companies, at least a sort of left went quite a long time put very final question this how much time should aboard be spending ? Trying to find out the views of its shareholders. And how do you do that ? Particularly with retail question. I suppose the whole climb really talked the larger shareholders. Unless they invite, as they do in vital the retail shelves to come to the games which point the board should be out and about talking to the normal return investors. Now everyone knows that a lot of the shareholders now come off platforms. Business comes from it's, a growing cohort. Investors that need to be looked after properly. But in terms of doing nothing, the german have regular contact with the number. The chairman will be a large shareholders arrange a meeting, come in sight. Any problems and issues discussed. The manager. All these sorts of things i think we have to remember with their shareholders. They appoint a manager. If we have a problem, the board is the person that really needs the entity. That release talked that out that's one of the real strength of close any structure you have an independent board with teeth that actually can change things and can improve performance or change managers or strategies better to better suit, current market conditions. Very good strength. I want to move on now to how do you value growth investing on ? What does it mean for investment trusts on their discounts ? And you you're a fund manager ? What could you lout for us first ? Well, what what's the growth versus valued dilemma ? I think i think the dilemma, inasmuch as there is one at the moment, is that once performing extremely well, the other is performing less well. One is attracting a huge amount of money, the other is not that's reflected in discounts on premiums and investment trust. So there is a bit of uncharacteristically wide disconnect between what you're paying for growth. This is what you're paying the value relative to history. It's impacted returns for a lot of investors from managers and and investors, and so is naturally something that people are discussing a great deal at the moment. It's kind of one of the one of the major questions facing investors at the moment inequities globally, let's bring up a couple of chance we've got here in which you very kindly supplied us with on how value is going against growth. The what if i can't bring you into this next how you as an investor, stop playing this dude. Just stick with growth is now the time to blend it. Whatyou did. It depends on the allocation term up to an area so uk we may have a lot of allocation to emerging markets or into asia so we can actually try have a blend. So have some growth in some value because we were never really going to pick the turns at the moment. I agree that growth is the place to be scarce. I'm prepared to pay up for it. One of the biggest star fatness is momentum on quality in the market and that placed right into the growth thing. Same rising earnings per share share price momentum and that's what ? We have to be that's where you're gonna get your money. But you always know that every now and again there'd be a spike up in value. So if you look very closely when the market rebounded off the selloff, kyu won the things that best with the value stocks, the things that being complete bombed out. Perhaps a good example that would have been the supermarkets you saw. Same with with a bid for hester has put everything back into play now one or two off the open, any funds we buy actually had those stocks, and therefore very nicely so it's about having a barbell approach, some great value. Andi, just riding that storm out there way. Don't we know what it's going to turn ? But at some point it will. You and house that's being reflected in the discounts or premiere that investment trusts are attracting based purely on their investments, you have seen a bit of a divergence and certainly area where it's, probably most visible, is very great focused investment companies. The likes of baillie gifford stable, the scottish movies, commercial mortgage, amber worldwide's. A two example. One large cat, one small cap, focused on their up, around twenty percent so far this year, with technology feeding a key theme. So although technology had a bit of a wobble over there in twenty eighteen, it's come back very strongly and that's, the strongest performing sector so far this year, so so fun to concentration on that area have been very popular. They've been trading around any v or premium, have been ableto issue shares. But on the flip side, if you're in a value camp, what's happening to discount it's been a tough time for value managers, and as a result, you're seeing some discounts. Some of those managers do have very long term track records, which which do stand them in reasonably good states on dh ratings can hold up for a while, but where they have a prolonged period of underperformance, then it has lead to discount widening, highlighting the investigators stable where the macro view and on you focus on quality but on valuation as well has let underperformance on the likes of james henderson, who runs the benches portfolio through a uk focus, a cz well as a value style, has underperformed on that funds. Now trading on double digit discount on dh looks quite attractive from that point of view, pull us. You're looking at it. You finding any value managers who are able to get there and a v keep their navy ticking over ? Perhaps better than you'd expect. Give it given the investments are gone. I think perhaps there's a few with one value fund that we buy one off them. Is the force more cos it's a pretty reasonable job. Poor not completely devalue. Well, sort of ten sport good companies. Just a distress prices where the market gets it wrong on being quite good, i think. Relative to the bench mall actually not a bad job, i think. Another one's way. Look out things like fidelity special special values, which is yeah, it's not a bad job again. With val, you expected to be lumping, you have to have to wait. Maybe for a period of donors or poor performance. And suddenly if all the chips come in the values recognized and you make exceptional returns for a quarter, you have to be prepared to take that volatility. And that dispersion of returns. I think alex rise done quite well through focus on catalysts, which does give you potential, teo short term returns to improve while there are four more stick to the start and that the value you said catalyst, just just run through what that philosophy is it's it's looking for stocks that are cheap butts have changes a big focus on alex. Alex right approach. So looking for a new management team or, for instance, banks, too, go from non different pain to paying dividends, an event that will lead to a market re rating that's reasonably fit it visible. That still isn't reflected in the price hundred times of the murders you're looking at anybody there on the growth or value camp that you particularly right way haven't mentioned ? No, i think i think if you could take a long term view, then i thinkit's a decent time to be buying value, and i think that as well, income almost goes hand in hand with value where it where it relates to equities so you don't see many high growth companies paying dividends at the same time as they're able to reinvest in their businesses for obvious reasons. So, yeah, i think we look across a lot of the uk equity income sector and consider a lot of those funds to be good value trading on discounts you're looking very long term. Bye equity income at a discount. You enhance the dividend you would he receive often enoughto to cover your fees completely ? Andi, equity income is is ah, a strategy is going to be the core of people's portfolios for decades to come, irrespective of how growth performs. Um, so we think there will always be a market for equity income funds. And when growth starts to before sorry, when value starts to perform again, we think you know that's an obvious place for people to start dipping a toe and discounts one arrow in your you'll make good money that way. What two of you thie argument is quite a sort of new economy argument that actually a lot of what traditional people said its value is valued it's a long term value trap the world has moved on. We've seen these big quality companies like facebook's, whatever the world emerged there, plumbing themselves in to the infrastructure of the planet almost fifty sixty, seventy year view yeah, yeah, i get a sense that they don't know they're on a growth path, regardless of gdp or what interest rates are. Well, i guess you have to believe that this time is different way bean bean there before, and i think that the problem, if there is a problem with growth and it's obviously performing fantastic at the moment, is that when you pay high valuations, you open yourself up to big disappointment when things don't play out well. So i think if there's going to be a turning point between the two stiles and they shouldn't be viewed is completely distinct because there is a lot of overlap between you. Know there's a lot of value stocks grow very nicely that's, where we're interested in getting exposure. But if there is going to be a a reversal in the current trend, it's probably because it is probably going to be driven by disappointment in growth rather than some phenomenal uptick in in value on dh that's going to cause the valuations of growth companies to moderate, i think i think the other thing that's interesting is that the growth rally has bean driven by relatively few companies, so it is literally a handful of global companies, maybe ten or twenty companies globally that have really driven growth indices that really trading at very high multiples, doing a huge amount of emanate, grabbing all the headlines, forced buying from you know, this is a virtual cycle for now, but at some stage it may it may stop, and then i think value is really get rich slowly collect dividends, reinvest dividends if you look over the very long term that's being a fantastic approach, and so i think people will eventually come backto that way of things poor. We've heard a lot from active managed at some point whether their growth. Or value the markets again. A fall that's, the point where active management will prove it really value to the punters. Yet still, the markets keep going up. Still, the index funds do. About how long do you think people i need to keep the faith advantages ? It's a good question. I think that looking way have to for work. Look at the active versus passion. Passive managers head in your hands when your eyes obviously difficult. It's quite a tricky one. It is very hard to get putin invest in a fund. It's more expensive that may not perform for us, is it is it is a no brainer, particularly it's. Very hard to see how many active manages consistent outperform the benchmark. A very small number of funds in the us, which is what ? Elsewhere you can see where there's a dislocation in the market. For example, after brexit there was in june of twenty sixteen. There was a significant rotation away from domestic caps on rotated back into war. International dollar owners so materials and engine companies in particular and most of the active managers weren't ready for it. Guess what, there's there's a bit. Where ? If you look at the relative court, all of paris representative peer group suddenly goes from being second. Then in december last year there's another dislocation where there was a massive rally and suddenly missed out again. So there's another dislocation. So we need those effects to wash. Out. Otherwise people start using anymore. The pass is in the back. There's still good active manages to find we can find enough. You just gotta work very hard. Ah nde get won't know them very, very well because it won't be a straight line. But i still have every five apart from the us. Us is difficult. There are very few managers that you could buy there, but certainly elsewhere lots of great managers you and we talked a lot about individual managers. But what does the siri's of discounts and premier at sector level telling us about where value is and you seeing much evidence that investors are using this to shift their allocation around ? S so it's it's an interesting one way have seen moves in the discount in in the first half of twenty eighteen, particularly asia emerging markets on europe or areas where you've seen a widening of discounts this year on dh that does throw up it's an opportunity so asia emerging market funds trading around fifteen percent discounts s o that does give you the potential through an investment trust to invest in very experienced managers with strong track records trading on fifteen. Cent discount so there is potential for that too narrow boost returns if you get more favorable sentiment on dh performance from emerging markets, you get the double whammy of tv performance on dh discount tightening the industry was talks a lot that you know, when something on a big discount was always the perfect time to buy and other high profile examples where that hasn't in case something was on a big discount that we now is the time for emerging markets or equity income, and very famously, it turned out not today. Well, it's, it's always yeah, making sure you're you're you're buying into a discount too, eh ? A true asset value. So with equities that's a little bit easier to quantify, the market can move against you, but more with alternative assets. All right, is there a way you need to be a bit more careful ? A bit more in depth knowledge ? Because if you buy into a trust on a on a discount and then there's two ways to narrow that discount, the share price could go up for the navy. Conform. Obviously, you're trying to benefit from the share price coming up to match the asset value. But if you're investing specialist, ask classes with with valuation that you can't, you can't necessary, isn't necessary up to date or ends up falling. Then that's that's, an area where people tend. On for the final third off the program. We are looking at self managed, so called independent investment trust what's their future at a time when there are ever more cost pressures on investors. Well, there's. A number of independent trust, are very independent. Trust out there. What are the characteristics that make them truly independent ? I would probably they have their own unique way of doing things. You could look at a number of examples. Practical, not always site would be things like all righty or caledonia, which are basically set up for the family investment vehicles. Very unique wives of running allocations. That is not what does not found anywhere else. And you really have to do your work. And actually they perform quite nicely on do a great deal of diversification in a portfolio. Sometimes you get comfortable with how they run it. The management team make sure your interests were aligned on their objective. Tonight you want to achieve on, then you consider to consider them. If you're following abroad, asset allocation so much in the u s and so much uk, etcetera, etcetera. It's very hard to use that sort of structures in that particular allocation model. If you got a bit more freedom on teo, be a bit more out of the box thinking they make a very good addition. Tio, how do you work out of fuel ? Vision is aligned with out of the rothschild family. All right, all right. Well, i think you really have to try and understand think they own circle twenty percent of it variety but it's it's off my head, it's it's a lot and their aim is to preserve welfare down the generations they want make money when it's available in returns, easily available from the market on day want to preserve money when the markets selling off. So if you are into long term capital preservation, well, you're not trying to beat a benchmark in the short term over the longer term you should actually turned out do much better the most of the traditional equity bench aren't simply because you avoid all the downside and if you can prove actually that is the case and it's we're doing the steps go sideways, makes money goes sideways, makes money generally when the market's racing where you're behind with the market has a really bad time like financial crisis or tooth or the two thousand actually, you'll do quite nicely because their view is to preserve money. Was there ever danger investing in a trust where there's a very large shareholder who's emotionally invested in the vehicle ? Yeah, they can be i mean, i think that there is a a balancing act or a tipping point, if you like, beyond which one sizable shareholder khun stop being a good alignment and actually introduced introduce risks that when you're alignments, differ, you're obviously not going to be the investor who who wins that discussion, and therefore you're left with a situation where there either fall into line with the major shareholders or or sell the shares. I think any, any such company worth its salt will have a government structure in place. That doesn't mean that makes that that stops that from being a problem. So i think, yeah, they're both both good examples where you have significant family interest, nothing. Then you're probably not going to be in a position as a small shareholders to dictate how they get paid. Who goes on the board, the direction of travel, the investment policy. But you have to work out whether you're happy with that. I would be happy with that alignment, i think it's better to have that, then no having a shit for and you just throw up any issues about liquidity and trust again. So you had a billion pound trust, but say four hundred million pounds of that was locked away. Long term with the ex family who found it. It certainly can tio, and we're having a large state that isn't going tio trade it all. It's good to have a supportive shareholder registered. But having something that doesn't trade does reduce what he called the free flow. So the shares available for everyone else. And subsequently the trading liquidity eyes that tend to make any shares that do trade a bit more volatile. It can limit the board's flexibility in terms of, say, caledonia investment trust, with a case of family steak that limits the amount that the company can combine back. So it can't do much in the way of of discount control mechanisms in terms of other funds to buy backs, or perhaps a regular tender. The scope to do that is limited in canada and that's. One of the reasons it's currently trading on around eighteen percent discount. Andi, looking cheap on that basis, in my view. But there isn't a sort of catholics in terms of descent control to narrow that the flip side of that having a long term support of shareholder register, it gives you the chance to be long term. And you're thinking and some of these trust truly long term on dh caledonia, part of sourcing its investments. People come to them because they know that they're gonna have a long term, supportive investor on brick capital that we mentioned earlier. Part of that is getting access toe various different asset classes that it's difficult for an individual to do because they're sourced. Vier, a network of the rothschild family, and, in fact, the thie investment team that's developed over a number of years to support that, and now and now, it's. A lot more institutionalized but still benefits from the network, and the contact just very quickly is the broker's newman. Are you brokers to caledonia ? Okay, but when somebody get to trust off the ground every tied up with it when they're no longer there, they've moved on. How ? What do they need to put in place to ensure that that ethos continues so something like in russia ? Brooke, who set up personal it's a good question. I suppose you want a board the realized probably, that there are million their investors actually walked there money to be invested in that in that fashion. So there's a commitment from the board have run capital managed in that fashion and obviously aboard realizes if they can't continue it there's a good chance that that investors will desert them their vehicle we wound up capital returned. So then you really have to go out and find another manager who's actually capable off managing time itself. Now, in this case, they were very lucky to find troy who have these actual time. What ? So they made a perfect fit. Andi, i think it's been it's. Been very well received by investors to hold it, but it still continues to run. Bye bye. Manager has the same views on the same alignment of interests. It's about making sure that you continue the ball's continues to service the investors well, the shareholders, as i've become used to it if you can find a managed to conclude that it's a genuine fit, not someone changing what they do to try and get a picture, but it's genuine idea in their philosophy which troy is, then continue. What happened, help it does trust needs to be to ensure it holy independent it doesn't have to sit under, say, the sales and marketing on brother of ah asset management house i think the the answer is wedded to how big is an asset manager have to be nowadays to survive in an environment of increasing regulator costs and costs in general. So i think these days, based in london, managing less than five hundred million, you're going to struggle to do things properly. I think as well with a trust requires marketing. It requires all other sorts of advice that some of which you will get from your your, you know, mad or your broker, but there's a lot that goes on behind the scenes that means that you're running a trust is not a low cost thing to do, particularly if it's. Only one trust on that is that is your your bread and butter. So there are trust out there that a smaller that make it work, but i think is a rule of thumb. I mean, that would be quite difficult to run an asset management company in london managing a single trust with less than less than a good few hundred million today. And then on the flip side of that wall, how easy is it for a trust to maintain very individual identity ? If it's again outsourced a lot of its sales and marketing operations to asset manager, that might have a stable of ten, fifteen, twenty. Trust ? Yes, it's. Very difficult, because you're just blend in. I think i suppose i'm trying to think of a fund or investment trust that one actually fits into that stable because most of the ones for a big asset manager, they they actually if you controlled by that manager so it's very hard. If you come anywhere near a large group to maintain your independence no, you haven't done a study recently how truly independent board members are on trust. The majority of bulls are fully independent off the investment. Management houses. So that is, that is an area the people are looking at on diversity of that as well. No, but i think sort of speaking to your point on being different within within or without a large management house. The the key thing that the self managed independent trusts i tend to have to do is have a nen vestment strategy. A mandate that sets them apart from the crowd. Very much speaks truth. The issues facing the whole investment company space of making sure that you're your mandate is individual. Your your fees are attractive. You used the investment company structure either toe pay a dividend, investing small cats or less liquid asset classes. I have an independent board that reviews that that process and all of those sections that's, that's really what some of the specialists can do tear themselves apart. But in a time when there's a more more of a spotlight on fees and charges, is it tougher to be independent today ? Wholly independent called it that it wass so ? Yeah, if you call independent self managed, i suppose difference would be self manages. Self manage would in that way. You you're not part. Of a large farm management group, unusually, you have typically have some employees rather than justin pointing independent third party management groups. Wit on, for instance, has andrew bell, the ceo it's runs part of the portfolio on is in charge of appointing a multi manager approach of appointing other um, other managers t do silence of the portfolio, so from that perspective, you can keep the cost of the top level company you can manage those it might unlike other contracts and not be based on a percentage illness assets, so it could just be the employees, the the, the footprint, your rent so it does have scope to be low if you've got a large enough vehicle. No, that said, if you're appointing on blind managers, you have costs about that level as well, but there is scope, but again achieving scale on investment companies. Some of the self managed i do have scaled to start with, so they're on a strong footing there under a final thought from you on this topic. What do you see ? The future of self managed trust ? I think they're going to have to be big, so i think i think it's. Difficult to launch a new one, for example, because a lot of these funds at a very large sunday, like rick capital is very large because it has been around and performing for a very long time. So i think it's unlikely that you could see any new ones ? Um, i think the ones that do exist, you have a role to play, so i think again someday, like caledon or capitalist discussed earlier really get you into something very different differentiated you're basically getting your you're having your money run like family office, i'm through a list of vehicles which i think is great on they do have flexibility, they do have the ability to to change their views and be aggressive in a way that you wouldn't necessarily be able to assay part of a larger organization, the ability to be contrarian, to take strong views and to manage money with a very long term mindset. Well, that's, all we have time for it just remains for me to thank our panel. You and lovett turner pull hook way on andrew lister from all of us here. Thank you for watching goodbye for now.


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