A MANAGEMENT overhaul instigated in 2015 is beginning to bear fruit for Scottish Investment Trust, which posted a net asset value per share total return of 29.4 per cent in the year to October 2016.

This compares to a rise of four per cent in the preceding 12-month period and, while the trust does not have a formal benchmark, matches the MSCI All Country World Index’s rise of 29.1 per cent.

Trust chairman James Will, who was formerly chairman of Edinburgh-headquartered law firm Shepherd and Wedderburn, said that while the long-term aim of the trust is to produce above-average returns “it is nevertheless pleasing that the company’s new investment approach has demonstrated early benefits”.

Manager Alasdair McKinnon, who has led the trust’s management team for two years after taking over from John Kennedy, said much of the performance was down to his team’s high-conviction stock-picking approach.

“When I took over in February 2015 the board and I looked at the marketplace and looked at the world and said it’s going two ways – there are low-cost tracker funds that mirror the performance of an index and there are highly active managers that people want to invest in,” he said.

“We wanted to go down the route of the highly active approach so had to structure the trust so we could deliver strong performance that would excite investors.

“My natural style is a high-conviction approach and we needed to put in place a team that would buy into that.”

The management team, which is directly employed by the widely held trust, has been reduced in size from 11 to four, all of whom Mr McKinnon said are “singing from the same song sheet”.

Among the changes they have instigated are a reduction in the number of holdings in the trust from between 70 and 120 to between 50 and 100. At the end of the financial year it was invested in 70 companies.

Mr McKinnon said the team’s approach means it will look to invest in companies that are being shunned by most other investors, those where “change is afoot” and those that are solid businesses but have scope for further improvement.

Australian winemaking business Treasury Wine Estates, which falls into the first category, was the greatest contributor to the £893 million trust’s overall performance, making a total return of £21m.

“Most other investors didn’t want to invest in it because of its history,” Mr McKinnon said.

“It used to be owned by Fosters and we bought in in August 2015 after a change of management.”

Dividends at the trust increased by eight per cent to 13.5p for the year while a special dividend of 9p per share took the total for the year to 22.5p. That represents a rise of 40.6per cent on the previous year’s total.

In terms of management costs, Mr Will said the restructuring of the trust’s management team as well as the outsourcing of most of its administration function to Edinburgh firm R&H Fund Services had seen the annual fee charged to investors fall year on year. The fee has gone from 0.68 per cent in 2014 to its current level of 0.49 per cent.