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15 June 2002

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The Scottish Investment mafia is outraged. After 115 years, those activist sassenachs at Hermes and impertinent Frenchies at Axa are daring to question the performance of the Scottish Investment Trust. The recent record is sort of middling, but it hardly warrants Hermes chief activist David Pitt-Watson clambering over the ramparts rousing rebellion.

Mr Pitt-Watson likes tracker funds. He can see what they do, and reckons they both perform better and cost less to run. It's odd, therefore, that he has taken the trouble to amass 9pc of a trust that isn't one.

It's a rum rebellion all right. Hermes and Axa don't want to change the board, merely to invite shareholders to tick a box if they want their funds passively managed.

If so, the relevant funds would switch to the tracker, leaving the rest in the existing shares.

This would cost £22m but Mr Pitt-Watson reckons it would close the trust's 10pc discount to net asset value. The board describes it as complex financial engineering rather than sound investment management and could mutter about the disaster that has overtaken split trusts. The rebels may take their proposals direct to shareholders, but expect chairman Sir Angus Grossart to repel boarders.

Neil Collins
©Telegraph Group Limited 2002
Daily Telegraph