Garrett-Cox off-loads shares as Alliance Trust targets £6m of 2016 savings

Dundee-based Alliance Trust has announced that it is on track to deliver combined savings for the investment business of at least £6m for 2016.

The wealth manager updated shareholders on the progress of a comprehensive revamp of the company as it emerged that former chief executive Katherine Garrett-Cox and her husband have sold £1.5 million of Alliance Trust shares while Elliott Capital, the investment trust’s hostile shareholder, has raised its stake in the company.

The sale, which halves the number of Alliance Trust shares directly in her control, comes two months after she was demoted to chief executive of Alliance Trust Investments, the fund manager subsidiary which currently has the contract to run Allaince’s £2.8 billion of assets.

Her husband, Jeremy Garrett-Cox, meanwhile, also sold 305,683 shares at £4.93 each on Friday, according to the same stock exchange announcement.

Mrs Garrett-Cox and her family still hold 305,683 shares and there are over one million shares held in an employee benefit trust for her, giving her an overall stake of 0.25 per cent.

The news comes at the end of a tumultuous year for the trust’s board, which came under pressure to agree to a number of changes following an attack by activist investor Elliott in the spring.

As the year comes to a close, the company has given more details on the progress it has made to enhance shareholder value having announced changes on 1 October as part of a radical overhaul of the company, prompting its share price to rise 3 per cent.

Firstly, the MSCI All Country World index is now used as the benchmark for the trust with an outperformance target of 1 per cent annually, net of fees.

It will also focus more on global equities and is disposing of non-core investments such as fixed income, commercial property and resources. Fixed income exposure has already been reduced by 48 per cent to £74m to date through the realisation of holdings in Alliance Trust Investments’ bond funds

On the costs side, the board said it is on track to deliver combined savings for the investment business of at least £6m for 2016. A special dividend has been announced of 1.46p per share, which will be paid on 31 December, 2015.

An investment mandate awarded to existing manager Alliance Trust Investments at a rate of 35bps on average NAV will be in place by early 2016. The trust is targeting an ongoing charges ratio of 45bps or less by the end of 2016, down from 60bps in 2014.

Meanwhile, the trust’s discount has narrowed to 10.5 per cent, compared to 12.6 per cent for the first nine months of 2015, as a total of 4.5 per cent of the company’s shares have been bought back and cancelled since 1 October. The board is aiming for the discount to narrow to single figures.

Progress has also been made towards making the board fully independent, with only non-executive directors.

Karin Forseke and Alastair Kerr will step down from 1 January and the trust is seeking a new chairman.

It has also found new non-executive directors whose hires are subject to regulatory approval.

Alliance Trust shares recently peaked at £5.17 at the start of this month having recovered from £4.51 at the end of September. They have slipped to 484p, down 3.9p yesterday, and are up just 1.5 per cent since the start of the year. With dividends included, shareholders have had a total return of 4.5 per cent, ahead of a 3.4 per cent fall in the FTSE All Share.