BRITISH Assets, the £490 million investment trust traditionally run from Edinburgh, is deserting F & C Asset Management in favour of Blackrock in London.

The 116-year-old trust which has 30,000 small shareholders and has been a stalwart of the small equity income sector, is to be converted into a multi-asset portfolio. The UK equity income exposure will be halved to 40 per cent, with 60 per cent invested on a tactical asset allocation basis. The aim is to target the pensions market, in anticipation of the freeing up of personal pensions from next year.

The trust is also making a tender offer for at least 20 per cent of the shares, at a two per cent discount to asset value, to give an opportunity for exit.

British Assets was managed for over 10 years by Julie Dent, who survived the upheavals surrounding the former Ivory & Sime business and retired in 2011 after 25 years with what became F & C. Ms Dent handed over to Phil Doel three years ago. According to Trustnet, the trust's performance ranks it bottom of a 10-company sector over three years.

F & C accepted a takeover offer from Bank of Montreal at the start of 2014.

Trust chairman Lynn Ruddick said the trust would become "a strongly differentiated and relevant vehicle focused on delivering a highly attractive product offering in the rapidly changing lifetime savings and pensions market".

Analyst Simon Eliott at Winterflood Securities said the move was "an attempt to meet a growing investment need by using the advantages of the investment trust structure".

He said the chancellor's freeing up of pensions from next April has sparked discussions across the investment company sector about how to respond.

He added: "We suspect many across the industry will monitor British Assets' progress carefully and it seems likely others may consider following its lead."