Alliance and Witan join forces to form new £5bn investment trust giant

Updated: 23:20 BST, 26 June 2024

Two of Britain’s oldest investment trusts have revealed plans to merge in a deal that will create a £5billion funds giant.

The deal brings together Alliance Trust, which dates back to 1888, and Witan, which was founded in 1909.

The firms said after they join forces later this year, they will likely be eligible for admission to the FTSE 100 index of Britain’s biggest listed companies.

Merger: Alliance Trust and Witan, which each date back more than a century, said they were likely to be eligible for admission to the FTSE 100 after they join forces later this year

The merger is just the latest round of consolidation in the fund management sector and came as the boss of rival asset manager Liontrust predicted more tie-ups were on the way.

Witan chairman Andrew Ross said: ‘The companies share similar cultures. The deal will result in one of the leading investment companies in London and will stand our shareholders in good stead for many years to come.’

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Laith Khalaf, head of investment analysis at AJ Bell, said: ‘This is a blockbuster merger of two of the biggest and oldest names in the investment trust world.

The deal will result in lower annual charges for investors, as well as preserving the long dividend track records of both trusts.’

Other recent deals in the sector include a tie-up between Fidelity and Abrdn’s China trusts.

Liontrust chief executive John Ions said the industry was ‘over-supplied with funds’, with 550 just in the global equity sector.

He added: ‘I would see more consolidation taking place. Putting together those two large investment trusts will deliver more economies of scale to reduce costs for the investor.’

Shares in Alliance Trust yesterday climbed 0.5 per cent, or 6p, to 1210p, while Witan rose 2.5 per cent, or 6.5p, to 267.5p.

Liontrust’s £6bn outflow

Fund manager Liontrust has pinned its hopes on interest rate cuts and an end to political uncertainty as it seeks to recover its fortunes after slipping to a full-year loss.

The group revealed it was £579,000 in the red for the year to the end of March, down from a profit of £49.3million a year earlier.

It blamed ‘negative investor sentiment’ as clients pulled £6.1billion from its funds over the course of the year.

But chief executive John Ions said there were now ‘signs of a change in investor sentiment’, adding: ‘This is likely to move significantly when central banks reduce interest rates and there is greater political and fiscal certainty in the UK.’

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