BAILLIE Gifford will earn (pounds) 1.25m-a-year for running the (pounds) 330m Scottish American Investment Company, and has avoided the type of performance-related arrangement which slashed the fee paid to incumbent trust manager First State Investments to paltry proportions.
Scottish American (Saints) announced on Tuesday that it was transferring its management contract to investment house Baillie Gifford, which is based in Edinburgh.
First State earned a management fee of just (pounds) 169,000 for running Saints during the six months to June 30.
Richard Burns, the senior partner at Baillie Gifford, had told The Herald on Tuesday: ''We don't believe in getting paid nothing for managing a fund.''
Saints hit the headlines in September after it emerged that statements from chairman Brian Ivory, accompanying both its 2002 annual and original 2003 interim results, contained almost word-for-word large chunks of earlier statements from Sir Angus Grossart for the unrel-ated Scottish Investment Trust.
Ivory claimed on Tuesday this embarrassing debacle - which was the talk of the town in Edinburgh - was not the reason for the switch of manager. Instead, he cited poor investment performance under First State.
Saints said Burns would lead the management team on Saints, although the actual portfolio will be run by Patrick Edwardson.
It said that an annual management fee of (pounds) 1.25m - fixed for two years - had been agreed with Baillie Gifford. Saints added there would be no performance-related fee, and a secretarial fee of (pounds) 100,000 would be paid annually. The management contract is subject to six months' notice and Baillie Gifford will take it over on January 1
In light of an increased emphasis on a progressive dividend policy, Saints said its UK and overseas portfolio would be managed to achieve an above-average yield expected initially to be more than 4%.
The benchmark of the investment trust, which has about 12,000 shareholders and is more than 80%-owned by private investors, will be a 70/30 composite of the All-Share Index and FTSE World-ex-UK Index.
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