SOMETHING which really struck home last week when it was announced Scottish Investment Trust is to be absorbed into a JPMorgan-run fund, thus losing its independence, was the speed with which heritage spanning centuries can disappear.

The £671 million Scottish Investment Trust can trace its roots back to 1887.

The writing had probably been on the wall since its board announced back in June that it was launching a review of the trust’s management arrangements, following a five-year period in which the fund had underperformed a key equities index.

However, at that stage, the board had appeared to leave the door slightly open to a future in which Scottish Investment Trust continued to be a self-managed, independent fund.

Another possibility had looked to be that Scottish Investment Trust could continue as a standalone company but with the mandate for running it taken over by a large fund management group. Scotland has several asset management houses which run investment trusts so, while there would have been plenty of London options as well if the trust’s board had decided to go down this route, there would have been some chance that the funds could have remained north of the Border.

Of course, the impending loss of Scottish Investment Trust as an independent entity, assuming the deal announced last week reaches completion, is just one of a number of major setbacks for the nation’s fund management sector over years and decades.

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The board of the £3.7 billion Alliance Trust, which was also previously a self-managed fund, decided nearly five years ago to outsource the investment of its assets to a raft of different external managers.

Alliance Trust continues to be based in Dundee but its funds are no longer managed in the City of Discovery.

Going back further, other blows for the Scottish fund management sector have included, in 2002, the then £1.4bn Edinburgh Investment Trust’s decision to move from being run by Edinburgh Fund Managers in the Scottish capital to Fidelity in London. The trust was subsequently run by Invesco and is now managed by Majedie.

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We also had in the 1990s the break-up of British Investment Trust, which had been run by EFM, by the British Coal pension schemes, which liquidated their combined 84.9% stake.

Of course, we must not become too downbeat and remember the great successes achieved by Scottish fund managers over recent decades.

Edinburgh-based partnership Baillie Gifford, a major player in the investment trust sector, has enjoyed spectacular growth in assets under management to around £350bn. And its flagship Scottish Mortgage Investment Trust had total assets of £21bn at September 30.

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The creation of an independently run, heavyweight fund management operation in 1998 by the Edinburgh institution known then as Standard Life (which later merged with Aberdeen Asset Management and sold off its life and pensions business and is now called abrdn) was also a remarkable success story.

However, even taking into account all the positives, the impending absorption of Scottish Investment Trust is a pity.

That is not in any way to say the board has not done its job diligently in reviewing options and selecting the one it believes is best for shareholders.

Rather it is just a pity the trust experienced a period of investment underperformance, relatively short in the context of its long history, that triggered a wholesale review following which the favoured option will see the fund lose its independence and management of the assets shift from Scotland.

Heads of terms have been agreed by the Edinburgh-based trust’s board with JPMorgan Global Growth & Income and this fund’s manager, JPMorgan Asset Management, for a combination of Scottish Investment Trust’s assets with JGGI. This deal will effectively see the venerable Scottish trust’s assets absorbed into JGGI.

All shareholders in Scottish Investment Trust, which employs 10 people, will receive new shares in JGGI under the terms of the deal. The Scottish trust’s home at 6 Albyn Place, which is valued in the accounts at £2.025m, will be sold off.

Scottish Investment Trust, which said it had received a “large number” of proposals after inviting these in June, declined to comment last week when asked if its employees would be made redundant if the JGGI deal goes ahead.

Alasdair McKinnon, lead manager of Scottish Investment Trust, said in an eloquent, gracious and detailed post on social media platform LinkedIn last week that the transaction brought “mixed emotions”.

He added: “Our announcement of a combination with JPMorgan Global Growth & Income heralds a new era for the Scottish Investment Trust.”

It feels much more like the end of an era than a new one, given the trust’s impending loss of independence.

Touching on the trust’s long history, Mr McKinnon said: “The self-managed investment trust model was created in the 19th century and we were almost unique in keeping this going.

“In recent years we’ve attempted to preserve the very best elements of this model but, at the same time, make the essential changes to ensure the company was relevant for the modern era. However, the best option now is that the company adopts a more conventional structure.”

It is still sad though that this model, which has stood the test of time for so long, will not be the one which will prevail for Scottish Investment Trust if the deal with JPMorgan Asset Management and JGGI is approved by shareholders and completed.

Scottish Investment Trust, noting it had adopted a “high conviction, global contrarian investment approach” in 2015 as it announced its review of arrangements in June, had declared then there was “no certainty” any changes would result, with the board flagging “strong recent short-term performance”.

However, it had added: “The board’s view was that a period of at least five years would be required to evaluate the company’s returns under this mandate. The company does not have a formal benchmark but, by way of comparison, the company’s NAV (net asset value) total return has underperformed the sterling total return of the MSCI All Country World Index over the five years ended April 30, 2021.”

Scotland suffered another blow in the context of its proud finance sector history recently when the institution known formerly as Royal Bank of Scotland decided to abandon that name at parent-company level and rebrand itself as NatWest Group.

This change of name took effect in July last year, nearly 12 years on from the long-established institution having to seek a UK Government bail-out running to tens of billions of pounds as it found itself on the brink of collapse amid the global financial crisis.

Royal Bank of Scotland, however, had amassed centuries of generally proud tradition before then, having been founded in 1727. The NatWest name dates back to 1968.

The name-change plan had been announced in February last year, shortly after Alison Rose’s accession in November 2019 to chief executive of what was still then Royal Bank of Scotland at group level.

The reality is the institution headed by Ms Rose is not in a practical sense run from Scotland any more, in that the chief executive’s contract states that she is based in London.

Ms Rose worked for NatWest when it was acquired by Royal Bank of Scotland back in 2000 after a hostile takeover battle, having joined the English bank as a graduate trainee in 1992. Royal Bank of Scotland has been retained as a brand north of the Border but the key thing in terms of naming is what the institution is known as at parent-company level in the UK and on the international stage.

The Royal Bank of Scotland name-change and the absorption of Scottish Investment Trust are two very different things. These events have also arisen from very different decision-making processes.

However, both show the speed with which long heritage that must have looked for much of the lives of Royal Bank and Scottish Investment Trust as if it would prevail forever can be left by the wayside in these modern times.