Baillie Gifford wins £200m Keystone Trust from Invesco

Kate Fox of Baillie Gifford

The £200 million Keystone Investment Trust plc said on Monday it has decided to appoint Edinburgh-based investment giant Baillie Gifford to manage the trust using its “Positive Change” investment strategy.

The change is the latest investment trust loss for Invesco.

Kate Fox and Lee Qian of Baillie Gifford will manage the Keystone portfolio on a day-to-day basis.

Keystone intends to change the name of the company to Keystone Positive Change Investment Trust Plc.

Keystone said Baillie Gifford’s “Positive Change” approach is a “global equity strategy which seeks to provide attractive investment returns while contributing towards a more sustainable and inclusive world.”

Keystone Investment Trust chair Karen Brade said: “Following an extensive review of the company’s strategic direction and after a competitive tender for its investment management arrangements, we are pleased to propose Baillie Gifford’s successful Positive Change strategy, tailored to take advantage of the company’s investment trust structure.

“We were impressed by the Positive Change team’s strong ethos, investment process and performance record, and by Baillie Gifford’s enthusiasm to reposition the company for long term success.

“We now aim to deliver attractive returns through investing in companies addressing critical challenges in areas such as healthcare, education, social inclusion and the environment, and to meet the demands of a wide range of investors who are seeking opportunities to invest in solutions to global challenges.”

Keystone added: “The board has agreed, subject to contract, to appoint Baillie Gifford as the company’s AIFM, company secretary and administrator.

“The appointment of Baillie Gifford will also be conditional upon shareholders voting in favour of the new investment objective and policy and regulatory approval.

“Baillie Gifford is an independent fund manager with approximately £287 billion under management as at 30 September 2020 and is the largest manager of UK listed investment companies by assets, managing 12 investment companies.

“Baillie Gifford’s Positive Change strategy has dual objectives: to generate attractive investment returns and contribute towards a more sustainable and inclusive world.

“Since its launch in January 2017, Baillie Gifford has made strong progress towards delivering on both objectives.

“The Baillie Gifford Positive Change Fund has returned 33.5% p.a. net of fees compared to the MSCI ACWI Index return of 9.5% p.a. (3 January 2017 – 30 September 2020).

“Assets under management in Baillie Gifford’s Positive Change strategy were in excess of £2 billion as at 30 September 2020.

“Baillie Gifford’s dedicated Positive Change team consists of seven investment and impact professionals.

“The Positive Change team are supported by four Portfolio Advisors based in other investment teams at Baillie Gifford.

“Kate Fox and Lee Qian will manage the portfolio on a day-to-day basis.

“Kate joined Baillie Gifford in 2002 and is an investment manager and co-manager of the Baillie Gifford Positive Change Fund, as well as a partner of the firm.

“Lee joined Baillie Gifford in 2012 and is an investment manager and co-manager of the Baillie Gifford Positive Change Fund.

“The Baillie Gifford Positive Change Fund can only invest in public companies, which tend to be more established businesses.

“Baillie Gifford believes that impact investing through listed equities is important in providing scalability and accessibility, and the value of patient ownership cannot be understated.

“However, Baillie Gifford also believes that a significant number of private companies have the potential to fit with the Positive Change philosophy.

“Investing in those businesses could deliver strong investment returns and enhance impact because capital goes directly towards earlier stage businesses, helping them to invest in research, hire people and grow their operations.

“Peter Singlehurst, head of Baillie Gifford’s private companies team, will support the Positive Change team on private company investments.

“Baillie Gifford will be paid an annual management fee, covering AIFM, company secretarial and administration services, based on the company’s market capitalisation to enhance alignment with shareholder returns.

“The fee will be 0.70% on the first £100 million of market capitalisation, 0.65% on the next £150 million, and 0.55% thereafter.

“The management fee will be waived for the first six months of management.

“There will be no performance fee provisions.

“The notice period in respect of the management agreement will, after an initial transition year, be three months.

“Baillie Gifford has also agreed to make a significant marketing contribution to the repositioning of the company and will also fund all investor marketing activity undertaken on behalf of the company during the first year of its management.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.