What’s in an investment name? One of the daunting challenges for retail investors is trying to discern from the lists of hundreds of funds and investment trusts what on earth the names stand for and what the fund does.
So many trust names are meaningless. What are we to make of an investment trust named Doric Nimrod Air Three (as opposed to its presumable next of kin, Doric Nimrod Air Two?). Or Third Point Offshore Trust? Or Crystal Amber, which sounds like an exotic mind-bending substance?
Trust names can linger long after their founding firms or individuals have ceased to have resonance. Other names can excite curiosity, if not a mass following. For some years I was a small investor in Jupiter Primadona Investment Trust. It was not nearly as exotic as the name suggested and its largest holdings seemed to comprise holdings in other folk’s trusts. After 43 years it changed its name in 2015 to Jupiter Global Growth. Duh!
But at least it avoided that meaningless cliché adorning those motorway lorries: “Logistics Solutions”. I was dismayed to see an investment trust launched this year had succumbed to this virus: the “Aberdeen Standard European Logistics Income Trust plc”. It hardly trips off the tongue. But at least we are given a geographical clue.
One of the outstanding successes of recent years has been Scottish Mortgage Investment Trust, managed by Edinburgh’s Baillie Gifford. It has shot to fame for a portfolio dominated by shareholdings in global giants such as Facebook, Amazon, Netflix and Google. The name Scottish Mortgage persists as a reminder of its origins – providing loans to US railroad pioneers. And doubtless some Scottish lawyers acting as trustees for family estates may have felt they could hardly go wrong with a trust known for those most reassuring words: “Scottish”, “Mortgage” and “Trust”.
Another trust in the Baillie Gifford stable is called “Monks”, evoking images of ageing bald investment managers scraping with quill pens over a sloping desk. That may well still be the case but the trust has nothing to do with monks. Located in the peaceful gem of Austin Friars in the City of London, it was formed in 1929 through the merger of two other trusts – Friars and Abbots. Today it is a highly successful £1.6 billion global trust managed by Charles Plowden and specialising in companies offering long-term growth prospects.
Edinburgh Worldwide is another Baillie Gifford managed trust, though rather obscured by the group’s better known trusts. This £346 million trust, managed by Charles Brodie, aims to invest in “initially immature entrepreneurial companies typically with a market capitalisation of less than $5 billion”. It has just reported results for the year to 31 October showing net asset value up by 31.6 per cent and the share price by 43 per cent – both well ahead of the S&P Global Small Cap Index. Notable performers (not a Scottish name among them) were Alnylam Pharmaceuticals, a gene silencing company, LendingTree, an online loan marketplace, and IPG Photonics, a manufacturer of fibre-lasers used in metal processing.
Edinburgh Worldwide is not to be confused with the much larger Edinburgh Investment Trust, a member of the Invesco Asset Management stable. This popular £1.38bn trust is focused on UK companies, has no discernible investment in Scotland and is managed by the well-regarded Mark Barnett – based in Henley-on-Thames.
Then there’s Scottish Investment Trust, the free-standing Edinburgh-based £845m trust managed by Alasdair McKinnon. There’s nothing notably Scottish in its global portfolio, the largest holding being the Treasury Wine Estates based in Australia.
Now comes ScotGems Trust, launched in June when it raised £50m. Managed by Ashish Swarup and Tom Allen at Stewart Investors in Edinburgh, it invests in promising smaller companies worldwide with a bias towards Asia Pacific with a market value below $2.5bn. It aims to provide long-term capital growth but – like other trusts in the Stewart stable – emphasises preserving investors’ capital as much as expanding it.
Overall it seems that a Scottish name and association, despite the near collapse of our two outstanding banks in the global financial crisis, still has pulling power among retail investors. The association resonates with notions of prudence, caution and conservatism – these qualities laced with a canny approach to risk.