The Keystone Investment Trust has rallied 10.4% in morning trading after Baillie Gifford scooped the £238m closed-ended fund off Invesco with a pitch to run a sister portfolio to the Baillie Gifford Positive Change fund.
It is the third time in a year that Invesco has lost a UK investment trust mandate to a rival asset manager, with Majedie appointed to takeover the Edinburgh Investment Trust in December 2019, while Aberdeen Standard Investments was appointed to merge the Perpetual Income & Growth trust with its Murray Income portfolio in July.
Both were managed by Mark Barnett, who was shown the door in May, while the Keystone Investment Trust has been managed by James Goldstone since 2017. Following Barnett’s exit, Goldstone took over his Invesco UK Equity Income and UK Equity High Income funds alongside Ciaran Mallon.
See also: Former Woodford fund may have helped ASI cinch Mark Barnett investment trust
Keystone board ditches UK equities for global mandate
The Keystone Investment Trust currently sits in the AIC UK All Companies sector but will adopt a global equities mandate to be managed by Kate Fox (pictured) and Lee Qian, a regulatory filing revealed.
Unlike the Baillie Gifford Positive Change fund, the investment trust will be able to invest in unlisted companies. Within the first three years, Fox and Qian will target a 5-10% allocation but their maximum allocation limit will be much higher at 30%.
The trust will be renamed the Keystone Positive Change Investment Trust, which the board said would help attract new investors to the investment trust to the benefit of existing shareholders. A waiver on fees will take place for the first six months of Baillie Gifford management, after which the fee arrangement will be 0.70% on the first £100m of market capitalisation, 0.65% on the next £150m, and 0.55% thereafter.
As part of the fee, Baillie Gifford will provide AIFM, company secretarial and administration services.
Keystone chair Karen Brade said Baillie Gifford was appointed following an extensive review of the investment trust’s strategic direction and a competitive tender for a new investment manager. The board started to question the UK focused mandate due to “challenging structural trends”, the regulatory filing said.
Stanhope Consulting advised on strategic options for the investment trust.
Brade said the board was impressed by the Baillie Gifford team’s strong ethos, investment process and performance record, and its enthusiasm to reposition the portfolio with a long-term outlook.
Under its new objective, the investment trust will aim to outperform the MSCI AC World Index in sterling terms by at least 2% annually over a five-year period on a net asset value basis. It will also be required to invest in companies whose products or services make a positive social or environmental impact.
The best ideas portfolio will typically invest in 30 to 60 securities.
The Keystone board expects changes to be implemented after the investment trust’s AGM in February 2021.
See also: Kate Fox: How Baillie Gifford’s impact fund is quadrupling the returns of its peers
