By Annabel Brodie-Smith
Spring has arrived and I’m looking forward to Easter – a relaxed holiday at a beautiful time of the year. An Easter egg hunt and roast lamb and everyone is happy!
We are not in at the barn yet – when did builders ever finish on time – but should be in next month. I’m avoiding thinking about the inevitable stress and hassle of moving by embracing Spring and Easter. Last week I had a very interesting afternoon talking to the chairs of three investment companies who have recently moved to a new management group. It’s well worth watching my webinar with Susan Platts-Martin of Baillie Gifford China Growth Trust, Glen Suarez of Edinburgh Investment Trust and Arthur Copple of Temple Bar Investment Trust. The main thing that comes across is the passion investment company directors have for their role. It’s clear that an independent board of directors is a great benefit for shareholders. They offer additional oversight and have a legal responsibility to protect investors’ interests. As Arthur Copple of Temple Bar explains: “At times the management change process was painful and time consuming for the board to say the least, but I am proud of the result and shareholder feedback has been immensely positive. A highlight has been being able to communicate with shareholders and, hopefully, help them achieve their goals.” Another benefit of the listed investment company structure is that shareholders can vote, attend AGMs and question the directors there. Our investment expert, Ian Cowie, explores this in his article this month. As Ian explains, “equities can empower every shareholder, big or small” and allow shareholders to express their views on “everything from executive pay to fossil fuels and gender equality”. This is not the case for open-ended funds and ETFs, nor non-fungible tokens (NFTs). No – I have no idea what NFTs are either! You’ll have to read Ian’s article. He also explains how the AIC is encouraging online platforms to do more to empower individual investors with our new Shareholder Engagement Award.
Investment companies’ ability to provide income when times are tough has come into its own over the last year. More than four-fifths (85%) of equity income-paying investment companies increased or maintained their dividends in 2020 despite the impact of the pandemic. This compares with just 23% of equity income open-ended funds. Find out more about this and the dividend hero investment companies here.
In our final article this month, Faith Glasgow, who edited Money Observer which we all miss, looks at whether the size of your investment company really matters. This has been much debated as wealth managers have grown in size and there has been growing pressure on investment companies “to become larger and more liquid”. Scottish Mortgage is the AIC’s largest member investment company with assets of more £17 billion, and there are a host of other big companies over £3 billion. But not all small companies have ambitions to reach this size and Faith explains why for those investing in niche areas “there can be disadvantages in being too large”.
Some important AIC news: our Chief Executive, Ian Sayers, has decided to move on later this year. He’s achieved so much for the industry and although Ian’s not leaving just yet, it’s a good time to recognise his achievements. These included changing company law to allow investment companies to buy back their shares – enabling investment companies to manage their discounts for the first time – and winning a landmark case with JPMorgan Claverhouse Investment Trust plc in the European Court of Justice in June 2007 to remove VAT on management fees.
Personally, it has been a pleasure working with Ian for more than 23 years. He's made the AIC a great place to work and most importantly, we've had many amusing times over the years.
Wishing you a Happy Easter,
Annabel Brodie-Smith Communications Director, AIC
Investment company chairs discuss their recent asset manager changes, exploring the events leading to the change, issues during the process, communication with shareholders and the advantages to shareholders.
