ACTIVIST investors do not appear to have the might to force changes at giant Dundee-based Alliance Trust, analysts at Winterflood Securities have concluded, but they remain "unconvinced" about the fund's long-term merits.

Activists led by Isle of Man-based Laxey Partners want the fund to adopt a discount control mechanism to narrow the gap between the price of its shares and the underlying portfolio.

However, Alliance Trust chief executive Katherine Garrett-Cox told The Herald on Tuesday that the trust would instead continue buying back shares, which can narrow the discount.

She said she had received many messages of support from investors.

Simon Elliott, head of investment company research at Winterflood Securities, said: “Laxey and other value-orientated shareholders do not appear to own sufficient shares to force through the resolution on their own.

“Our feeling is that long-term shareholders will take some comfort from the commitment to buy back shares on an opportunistic basis and support the board.”

Before the start of 2011, the fund had only very occasionally bought back shares.

But Mr Elliott warned of further uncertainty around the fund: “How Laxey will respond remains to be seen, but we would not be surprised to see further corporate activity.”

Mr Elliott gave a cautious view of Alliance’s prospects: “The fund’s performance record remains unexceptional under Katherine Garrett-Cox, a few months in late 2008 aside, and we remain unconvinced over the fund’s ability to outperform its peers on a sustained basis.”

Shares in Alliance Trust closed trading yesterday 6.1p, or 1.6%, higher at 377.5p.