Alliance chief happy to be tagged boring

City Editor

Thursday 28 June 2012

KATHERINE Garrett-Cox, chief executive of Dundee-based Alliance Trust, said boring may be "the new sexy" and claimed that investors are shifting money out of banks and turning up at the company's reception to put money into its savings scheme.

SATISFACTION: Katherine Garrett-Cox says investors are taking money out of banks and flooding towards Alliance's savings scheme

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TIM SHARP

Alliance Trust, which manages assets worth £2.6 billion, has struggled to match the performance of its rivals for large parts of the last decade but did win plaudits for an astute shift into cash in 2008.

Earlier this year Alliance defeated a rebellion by activist investor Laxey Partners but also came under pressure from Aberdeen Asset Management, Ms Garrett-Cox's former employer, which offered to take over the fund.Ms Garrett-Cox said: "Sometimes we get a bit of criticism for being boring but I think boring is good at the moment. Perhaps boring is the new sexy."She described the trust as "like a Volvo" as opposed to a sports car.The company's financial strength, she said, is a big advantage at present and has benefited its Alliance Trust Savings subsidiary which holds a banking licence.She said: "We are taking in a lot of cash."She added that many people were "concerned about their savings" in many UK retail banks."We have people literally coming to reception," she said. "It is an opportunity for us."Alliance Trust saw a similar trend when Newcastle-based mortgage lender Northern Rock ran into trouble in 2007.It reported that new account numbers at Alliance Trust Savings were up 40% in the first quarter of 2012.The company has in the past been heavily criticised for ploughing money into the hitherto unprofitable Alliance Trust Savings.Ms Garrett-Cox admitted it suffered "indigestion" a few years ago when its systems failed to cope with customer growth but insisted it is catering to a demand from people who want to self-invest.Ms Garrett-Cox, the ninth person to run Alliance Trust in its 124-year history, has sought to reform the trust since taking the reins in 2008.She said her predecessor, Alan Harden, moved the trust into some "esoteric assets, shall we say"."The reality is our share-holders did not really like that," she added."We have been trying to re-focus on our core global equity portfolio."She described as "hysterical" her first investment meeting at Alliance Trust, claiming that systems did not allow accurate attribution of fund performance.She has trimmed the stock list in the fund, which once owned holdings in 500 holdings."We probably did not know what many of them were," she said.Ms Garrett-Cox described Alliance Trust has having been "a massive work in progress".She added: "The returns are now looking quite respectable." However she contrasted it with £2.2bn Scottish Mortgage, run by Edinburgh-based Baillie Gifford, whose returns over the last decade vastly surpass those of Alliance Trust.Ms Garrett-Cox said: "The people at Baillie Gifford do a good job but it is effectively a geared proxy for emerging markets."Ms Garrett-Cox said economists at Alliance Trust predict that Greece will exit the euro in the future.The house has been trimming its positions in the region, in line with many other investors.But she admitted worrying about the "sheep mentality" that often sees investors move in and out the same assets at the same time.

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Alliance chief happy to be tagged boring

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