Appointment of Investment Adv

RNS Number : 1676O

Personal Assets Trust PLC

03 March 2009

 

PRESS RELEASE

Embargoed until 0700 hrs Tuesday 3^rd March 2009

Personal Assets Trust plc appoints

Troy Asset Management as Investment Adviser

The Board of Personal Assets Trust plc (“PAT” or “the Company”) is delighted to announce that Troy Asset Management Limited (“Troy”) has been appointed as Investment Adviser to PAT with effect from Tuesday 3^rd March 2009.

PAT was launched in 1983 and at 31^st January 2009 had shareholders’ funds of £165 million. Troy was established in 2000 by the late Lord Weinstock and at 31^st January 2009 had (excluding PAT) £592 million under management, £445 million of which was in equities. It is an owner-managed business, profitable and financially secure, with a stable structure and an experienced investment team.

Launched on 31^st May 2001, the Trojan Fund, which has the same investment objective as PAT, had by 31^st January 2009 produced a total return of 79.7% (7.9% annualised) compared to -5.1% (-0.7% annualised) on the FTSE All-Share Index, which is PAT’s benchmark. Based on data to 31^st January 2009, the Trojan Fund has also been in the top decile of the IMA Balanced Managed Sector over 1, 2, 3, 4, 5, 6 and 7 years, a remarkably consistent record of outperformance which has been achieved by cautious, risk-averse, low turnover investing.

Commenting on the appointment, Robert White, Chairman of PAT, said,

“Ian Rushbrook was unquestionably a unique talent and over eighteen years masterminded the development of PAT into an investment company which had gained the respect of shareholders, competitors, advisers and media in equal measure. Ian is and will continue to be sorely missed. However, encouraged by strong messages of support from shareholders, we move on to a new chapter and my fellow Directors and I are confident that, in appointing Troy Asset Management to work alongside the executive team led by Robin Angus, we will be able to continue PAT’s success and build on the strong legacy which has been established since 1990.”

Sebastian Lyon, Chief Executive of Troy, said,

“We are delighted to have been appointed investment advisors to PAT. At Troy we have been admirers of Ian Rushbrook’s investment approach for many years and I myself have been an investor in the trust for ten years. PAT has proved to be a paragon in the investment trust sector by maintaining a disciplined ‘No Discount’ policy which we wholeheartedly support.

“We very much look forward to working with the Board of PAT and building on Ian Rushbrook’s legacy of strong long term performance for shareholders.”

About PAT

PAT is an independently-managed investment trust which maintains its own office premises in Edinburgh and has its own permanent staff who will work closely with Troy in the running of the Company.

·        Robin Angus (Executive Director). Robin helped Ian Rushbrook create PAT in 1983. He has been a Director since 1984 and an employee of the Company since 1993. Until Ian’s death he worked in partnership with Ian on all aspects of the management of the Company, especially strategic planning and shareholder communications.

·        Steven Budge (Manager). Steven joined PAT from Friends Ivory & Sime in 2001. He runs PAT’s office in Edinburgh and, in collaboration with the Secretariat, is responsible for dealing, discount control, PAT’s investment plans and liaison with shareholders, brokers and IFAs.

Between 31^st October 1990 (when Ian Rushbrook took over the running of the Company) and 31^st January 2009 PAT’s share price has risen by 558% and its net asset value per share (“NAV”) by 402%, outperforming its benchmark, the FTSE All-Share Index, by 140%. Over the same period its number of shares in issue has increased by 374% through the creation of new shares in response to demand.

PAT’s key features are as follows:

·        Investment Objective. PAT is an investment trust run expressly for private investors. Its objective is to protect and increase (in that order) the value of shareholders’ funds over the long term and its benchmark is the FTSE All-Share Index.

·        Investment Policy. PAT has no policy restrictions to interfere with the investment management process. The way we invest is determined by a desire to achieve our objective of first protecting and then increasing our shareholders’ funds. Our investment policy is a means to our stated end and is not, as is the case with many investment trusts, an end in itself.

·        Dividend Policy. The Board intends the present dividend rate to grow in real terms and has a policy of never cutting the dividend rate. Since 1990 the annual dividend has risen from £1 per share to its current rate of £5 per share, an increase of 400% compared to the average dividend growth on UK equities over the same period of 80% as measured by the FTSE All-Share Index and a rise of 61% in the RPI.

·        Liquidity and Gearing. The Board believes in the active use of both gearing and liquidity and at one point during 2008 PAT’s liquidity was as high as 100%.

·        “No Discount” Policy.The Board’s policy is to ensure that the shares of PAT always trade at close to NAV. Uniquely for an investment trust, this is now enshrined in the Company’s Articles of Association. PAT’s shares have not sold at a significant discount to NAV since April 1995.

·        Service to, and Communication with, Shareholders. The Board regards PAT as being in business primarily to provide the best service it can to its shareholders. This commitment is reflected in our Quarterlies and our range of zero-charge investment plans.

Why the PAT Board selected Troy

The selection process was a careful and considered one extending over a four month period. The Board interviewed a very strong field of candidates which was narrowed down to a short list that included Troy. After a final round of interviews and discussions, the unanimous decision of the Board was that Troy be appointed as PAT’s Investment Adviser with Sebastian Lyon taking on the rôle of lead investment adviser.

The reasons for the Board’s decision were as follows:

·        Troy has a proven record of consistent outperformance both of the FTSE All-Share Index and of its peer group, the IMA Balanced Managed Sector. This has been achieved by cautious, risk-averse, low turnover investing of the kind that has characterised PAT. Troy’s Trojan Fund, which has been managed by Sebastian Lyon since its launch, has been in the top decile of the IMA Balanced Managed Sector over 1, 2, 3, 4, 5, 6 and 7 years. Launched on 31^st May 2001, the Trojan Fund had by 31^st January 2009 produced a total return of 79.7% (7.9% annualised) compared to -5.1% (-0.7% annualised) on the FTSE All-Share Index. It should be noted, however, that, like PAT, Troy seeks long term returns along with capital protection and has accordingly been prepared to accept individual years of underperformance during such times of rapidly rising markets as were seen between 2003 and 2006.

·        We have known Troy since its inception in 2000 and have kept in regular contact with Sebastian Lyon, who is a long-standing personal shareholder in PAT and has often visited us in Edinburgh. We are therefore confident that PAT and Troy have a cultural “fit” and can work together successfully.

·        Troy is an owner-managed business, profitable and financially secure, with a stable structure and an experienced investment team. This provides us with the necessary confidence that, in these unprecedentedly difficult times for markets, Troy has an assured long term future.

·        The Board looked for any change at PAT to be evolutionary rather than (as some of those we interviewed suggested should be the case) revolutionary. Troy’s investment philosophy and investment process are fully compatible with those pursued by PAT since Ian Rushbrook took over as Investment Director in 1990. Troy’s investment process is driven first by strategic asset allocation and then by stock selection, defined as “high quality at the right price”. Its investment style is non-consensus and high conviction, and is biased towards long term income growth and low portfolio turnover. Its portfolios are built from the top down and are designed to avoid permanent capital loss, a sell discipline being regarded as being as important as a buy discipline. All these are convictions that are shared in equal measure by Troy and PAT.

·        PAT will be the first investment trust to be advised by Troy and, at £165 million, will account for nearly a quarter of the enlarged funds managed or advised by Troy. This guarantees that PAT will be an important client for Troy and will be a major building block in the growth of Troy’s business.

Fees and Terms

The Advisory Contract is for an initial one year and a rolling six months thereafter. The fee structure, which is based on PAT’s shareholders’ funds, is as follows:

·        50 bps (0.5%) on first £100 million

·        62.5 bps (0.625%) on next £50 million

·        75 bps (0.75%) between £150 million and £500 million

·        62.5 bps (0.625%) thereafter

The fee has been structured to ensure that, taking into account PAT’s fixed costs as an independently-managed Company, PAT will consistently maintain a low Total Expense Ratio (“TER”) for its shareholders despite variations in the Company’s size. As an illustration, had the fee structure been in place throughout the year to 30 April 2008, PAT’s TER would have fallen from 1.11% to 0.96%.

About Troy

·      Troy Asset Management Limited (“Troy”) is an independent fund manager specialising in generating absolute returns for investors. Troy seeks to preserve and build investors’ wealth by constructing conservative portfolios for the long term, while maintaining competitive fees, tax efficiency and transparency.

·      Troy was established by the late Lord Weinstock in 2000 and is named after his 1979 Epsom Derby winner.

·      Troy’s funds are managed by Sebastian Lyon and Francis Brooke. The Chairman is Simon de Zoete and there are three non-executive directors, Michael Lester, David Newlands and Jan Pethick.

·      Troy manages approximately £592m (31^st January 2009) of assets, including three Open Ended Investment Companies (“OEICs”): the Trojan Fund; the Trojan Income Fund; and the Trojan Capital Fund. Investors include private individuals, charities, pension funds, trusts and endowments.

·      The Trojan Income Fund is the top performing fund in the IMA UK Equity Income Sector over the past one and two years.

·      The alignment of interests between investors and shareholders is a core element of Troy’s philosophy. The executive directors are shareholders in the company and significant investors in the Trojan Investment Funds.

Contacts

Personal Assets Trust:               Robin Angus (Executive Director)             0131 718 1179
www.patplc.co.uk

Troy Asset Management:          Sebastian Lyon (Chief Executive)              020 7499 4030
www.taml.co.uk

Quill Communications   Fiona Harris                                                            020 7758 2230

 

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