Alliance Trust’s performance buoyed by ESG focus ahead of make-or-break AGM

Beleaguered wealth manager can point to strong returns

Beleaguered wealth manager Alliance Trust has been buoyed today (April 14) by strong performance results with its chief executive Katherine Garrett-Cox crediting its new ESG-focused strategy.

The venerable Dundee-based firm has been under pressure from activist hedge fund Elliott Advisers to have new three directors installed on its board due to a period of underperformance (RI coverage).

Elliott has criticised the appointment of its head of equities Peter Michaelis, who has spearheaded Alliance Trust’s ESG focus, saying it was “without prior notice, through internal promotion without advertisement, without inviting external proposals, and without canvassing shareholder views”.

But Garrett-Cox credited Michaelis and his colleague Simon Clements – who joined from the sustainability team at Aviva Investors – for strong performance over the last six months.

She said: “The trust has outperformed the global sector over the first three months of the year, a continuation of the work Peter Michaelis and Simon Clements have done since they were appointed in September of last year.”

The duo joined Alliance Trust in 2012 with the acquisition of Aviva Investors’ then £1.5bn (€2n) sustainable funds business headed by Michaelis for £1m.Impressed with the team’s performance, the 127-year-old listed UK trust went on to make SRI head Michaelis its overall head of equities, taking over from IIario di Bon.

In a statement today, Alliance Trust says its equity portfolio has now outperformed the MSCI All Country World Index over one, three and six months.

Speaking to Responsible Investor, Clements said the results demonstrated that a focus on ESG does deliver better performance. “We believe a focus on sustainable companies, with business fundamentals, which are undervalued and a movement to a concentrated active global portfolio, can deliver performance.”

In the last six months, Clements has concentrated the portfolio, reducing the number of holdings from 84 to 69. He said it was still early days with Alliance Trust, but his work in this area over a long period has proven that investing in sustainable companies is a good strategy that works.

Alliance Trust says its share price had risen above 500p for the first time last month and is now trading at an all-time high of about 528p.

The news comes as Elliott is mustering support for its shareholder motion to appoint three new directors on Alliance Trust’s board at what is likely to be a tumultuous AGM on April 29.