The investment trust sector dates back to the mid-nineteenth century when entrepreneurs saw opportunities in new worlds and sought to raise funds to invest in ventures such as North American railroads, Hawaiian sugar plantations and rubber estates in Malaysia.
Men such as Robert Fleming and Alexander Henderson (the first Lord Faringdon) securitised the money they raised in the form of investment companies. Fleming launched Scottish American Investment Trust in 1873 and when Henderson died his estate spawned Witan Investment Trust.
names have become indelibly linked with fund management in this country. The names live on as do their family fortunes kept safe and prosperous within the investment structure they helped found over a century ago.
Housing wealth
Today the sector is still home to considerable family wealth. Rothschild Investment Trust (RIT) is the vehicle for Jacob Rothschild. Caledonia still looks after some Cayzer money. The Barlow family have Majedie Investment Trust husbanding their cash.
The old Jute barons of Dundee, the Scotts, have done well out of Mid Wynd Investment Trust. Brunner Investment Trust was formed with the proceeds of the sale of Brunner Mond & Co in 1926 which the eponymous family had sold to what effectively became ICI.
Then there are those who have done well from within the asset management industry and now choose to manage their own assets in the way they did for their clients. Personal Assets was the brainchild of the late Ian Rushbrook and now managed by Troy Asset Management of Weinstock fame.
New Star Investment Trust looks after the proceeds of the first Jupiter buy out on behalf of some lucky ex executives. Likewise Invesco Select is the home for funds liberated by Mercury Asset Management’s sale to Merrill Lynch for £3.7bn in 1997. Then there is the Independent Investment Trust managed and owned by some of Scotland’s sharpest financial minds.
Trust leader
Today the biggest of them all is Scottish Mortgage with total assets of £3.8bn. It was founded in 1909 by Carlisle Gifford and Augustus Baillie who formed the Edinburgh based asset manager Baillie Gifford to manage the trust.
The idea back then was to lend money to Malaysian rubber producers so that they could take advantage of a boom caused by the advent of Henry Ford’s motor car. In the event the plantation owners did not need the cash and Scottish Mortgage looked to the USA for its investments.
Today it is dedicated to finding and investing in what its managers believe to be the world’s most exciting companies. It is blue sky growth more interested in the opportunity than the valuation. It is long-term in its outlook with five to ten-year horizons.
It looks nothing like its index, the FTSE All-World, with an active share of 94%. It is low cost with an ongoing charge of 0.48%. It has a long and successful story. It is a truly modern fund with a rich history well worth investigating.
