Caledonia to fight on against new EU rules

THE outgoing head of Caledonia Investments has vowed the firm will continue its fight against EU legislation that he claims could cost UK investment trusts hundreds of millions of pounds.

Despite a "lighter touch" approach being secured in draft legislation from the European Parliament, Tim Ingram warned that separate draft proposals from the Council of Ministers contain no such concessions.

As the alternative investment fund managers (AIFM) directive moves towards finalisation, Caledonia will push for the exclusion of investment trusts from requirements aimed at averting global financial crises.

Ingram said: "We have put a huge amount of effort into this – somebody had to – on behalf of UK trusts. No-one can say there is a problem with investment trusts, either for their shareholders or the economy as a whole."

His comments came as Caledonia posted a 30.5 per cent rise in net asset value during the year to 31 March. Though this lagged behind the 46.7 per cent gain in the trust's benchmark, the FTSE All-Share index, analysts at Numis said Caledonia's long-term performance helped preserve the stock's "buy" rating.

Caledonia's net asset value has risen 32.9 per cent during the five years to the end of March, a 14.4 per cent outperformance compared with the All-Share.

Ingram said five and ten-year targets were Caledonia's performance indicators as the trust caters to long-term investors.

Caledonia – which ranks Irn-Bru maker AG Barr among its ten largest investments – raised its annual dividend by 4.4 per cent to 35.3p for the year. That marks the 43rd year running of dividend increases.

The trust's top ten investments – led in value by its 13.6 per cent stake in Close Brothers – accounts for more than half of its 1.18 billion in net assets.

Nearly two thirds of the roughly 30 companies in which it is invested are in the UK, followed by holdings in continental Europe, India and China.

Ingram said those holdings in India and China would be particularly affected by the AIFM directive, making it more expensive and time-consuming to do business.