SHAREHOLDERS in Alliance Trust have given overwhelming backing to a plan to shift management of its assets to specialists based outside Scotland after a 129 year association with Dundee.

Some 96 per cent of votes cast supported a motion to switch the running of the £3.3 billion trust’s equity portfolio to eight firms recommended by consultants, which directors hope will improve its performance.

The reform follows a review which was initiated after US hedge fund Elliott Management mounted a campaign to shake up the management of the trust, which has been based in Dundee since it was founded in 1888.

At a general meeting held in Edinburgh, investors backed proposal to buy back the near 20 per cent holding amassed by Elliott by a narrower margin.

The meeting was attended by only around 100 investors in a company that has built up a 30,000 strong shareholder base over the years, after providing a simple way for people to invest in equities

There were few sharp-suited City types in attendance at the meeting, where many people looked to be of retirement age.

Chairman Lord Smith of Kelvin told the meeting the votes provided a vote of confidence in a plan intended to restore the performance of the trust to compelling levels and to put it on a stable footing for the long term, adding: “Thank you for your support for the board we really appreciate it.”

Asked whether the outcome of the meeting was a sad for Dundee, Lord Smith insisted the changes would be good for the city.

He told reporters: “The number of jobs is going to go up, there’s no question about that. We’re firmly headquartered in Dundee and will be for a very, very long time to come.”

The Alliance Trust savings business, which helps thousands of clients manage their investments, will remain in the city.

“They’ve got something like 250 people and that will increase,” predicted Lord Smith.

On the decision not to include any Scottish fund managers in the group that will take over from the in-house Alliance Trust Investments team, Lord Smith said the bulk of the existing managers are actually based in London.

He added: “We had to choose the best.”

Independent director Karl Sternberg said: “There are great fund managers in Scotland, houses like Baillie Gifford are fantastic but remember they already have a suite of global equity products so why would you have them again?”

He added: “We’re not making any comment on Scottish fund managers.”

Mr Sternberg told the meeting the decision to shift to a multi-manager approach had been taken with the aim of improving the performance of the trust while allowing it to remain “sleep at night” safe in investment terms.

The directors concluded that Alliance Trust Investments’ focus on sustainable investment would be better served under another owner. The business will be sold to London-based Liontrust Asset Management.

Moving to a single manager could make performance too dependent on the success of one style of investing.

Willis Towers Watson (WTW) has been tasked with managing eight external managers in such a way that they outperform the relevant index by two per cent each year.

Currently the trust’s managers are only required to outperform by one per cent.

The management fee payable by remaining shareholders will increase to 0.65 per cent from 0.6 per cent.

The review process was initiated after Elliott spent a number of years agitating for change at the trust, which parted company with former ATI chief executive Katherine Garrett-Cox in March last year .

Around 118 million shares, or 77 per cent of votes cast, approved a motion giving the board authority to buy back Elliott’s holding at a 4.75 per cent discount to net asset value. There were 34.9m, 23 per cent opposed. Around 53 million votes were withheld.

Mr Sternberg noted shareholder organisations had raised questions about the choice of WTW.

He told the meeting TWT had been chosen to manage the investor panel by directors after a thorough process.

Lord Smith said the 4.75 per cent buy back discount was in line with similar deals in the sector.