ALLIANCE Trust has reported a setback to progress in turning round performance, as it confirmed the establishment of two English legal entities for its subsidiary companies in case of Scottish independence.

The Dundee-based company's core £2.6 billion fund achieved total return of 0.4 per cent in the six months to June 30, a tenth of the 4 per cent average in the global growth investment company sector.

Net asset value was up 0.3 per cent against 1.6 per cent for the sector. The fund ranks 29th out of 35 over one year, and just over halfway over three and five years.

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Its subsidiaries saw combined operating losses edge up from £1.9 million to £2m. Alliance Trust Investments narrowed its loss marginally from £1.7m to £1.6m, and increased assets under management by 2 per cent. "We saw net inflows of £81m from retail and institutional investors including a new corporate pension fund, reflecting our strength in fixed income and sustainable and responsible investment management," the group said.

But Alliance Trust Savings, which charges a flat fee which it hiked by 87 per cent in January, saw losses double to £400,000. That was before "non-recurring" marketing costs. ATS last month signalled potential redundancy for four senior marketing professionals after deciding to outsource the marketing function.

The group said: "Alliance Trust Savings grew assets under administration by 10 per cent to £5.9bn. During the period, profitability was impacted by a number of factors.

"These include the investment we have made in the intermediary channel, the phasing of the marketing spend, and a reduction in direct customer numbers as a result of consolidation and attrition following our recent pricing changes.

"We are confident that we have the right business model for the long term and believe our flat-fee pricing proposition is in the best interests of customers."

On its six-month record, ATS said: "The performance of our growth-oriented equity portfolio was impacted by market rotation in favour of 'value' stocks, as well as some stock-specific underperformance, which has been actively addressed."

It said turnover, which chief executive Katherine Garrett-Cox told the annual meeting had been at an unusually high 50 per cent, had reduced but that underperforming stocks such as Barclays and BNP Paribas had been sold.

On the referendum, the group said: "Having established two English-registered legal entities, for the subsidiary companies Alliance Trust Savings and Alliance Trust Investments, work is progressing on our plans to make these entities operational. In the event of a Yes vote, it is our intention to have implemented the legal entity operating model required to ensure that we continue to provide flexibility to our clients and customers, well ahead of the proposed separation timetable."