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Business Analysis & Features

Katherine 'The Great' Garrett-Cox silences the doubters

Impressive results vindicate Alliance's chief executive, who has been under pressure ever since an investor revolt, says Jamie Dunkley

Life hasn't always been all-conquering for Katherine "the Great". Alliance Trust's chief executive has faced some battles in her time, but she still stands out as one of the stars of British fund management.

Katherine Garrett-Cox hit the headlines in 2001 when she was appointed chief investment officer at Aberdeen Asset Management at the age of 33. Dubbed a "City Superwoman" for juggling the demands of work with family life, similar roles followed at Morley Fund Management (now Aviva Investors) before she joined Alliance Trust in 2007 – eventually becoming the chief executive of the UK's biggest investment trust in 2008.

Her early years at Alliance were modest, although the mother-of-four was described as "one of the most able fund managers of her generation".

However in 2010, the Dundee-based company was targeted by the activist investor Laxey Partners, which attempted to overhaul the company at two successive AGMs.

Laxey complained of "five calendar years of consecutive under-performance" (not all under Ms Garrett-Cox) and put a motion before fellow shareholders to consider appointing external fund managers to manage Alliance's portfolio. It also called for a review of Alliance's investment performance and the discount between its share price and net asset value.

Despite winning the votes – and Laxey subsequently selling its shares in the company – the pressure has been on Ms Garrett-Cox ever since to prove her worth.

Yesterday, she marked five years in charge at the company with an impressive set of results.

Alliance reported total shareholder returns of 15.2 per cent during the first six months with the net asset value up 12.5 per cent to 495.6p. Its investment team now manages total assets of £4.6bn, including £1.5bn of third-party funds.

"These results are very strong and I'm particularly pleased with our shareholder returns because that's what investors get back in their pockets," she said. "The fruits of our labour are coming through, although market conditions remain challenging."

Ms Garrett-Cox said the improved performance had been helped by shifting the company away from being "too UK-centric". About 95 per cent of the company's assets are now invested in equities compared with 75 per cent in 2008, with many of these now in overseas stocks such as Pfizer and Walt Disney.

Despite the upturn in Alliance's fortunes, Ms Garrett-Cox warned that uncertainty over money printing in the US and Mark Carney's policies in the UK will lead to more economic volatility this year

But she believes the company's careful stock-picking will ride out the "choppy" markets. "Investors are anticipating a likely change in policy towards quantitative easing in the US and look for clarity of policy from the new governor of the Bank of England," she said.

"This volatility highlights the problem in trying to second-guess macroeconomic conditions which, despite being shaped by very long-term trends, are characterised by short-term sentiment and political factors.

"The global reach of the largest companies that make up the regional indices is one of the main reasons for this as they are able to adapt their strategies and target higher growth areas.

"This is why we are committed to our rigorous and thematic bottom-up approach to finding high quality companies with strong fundamentals."

She remains intent on proving that Alliance investors were right to back her instead of the activists.

Does that mean another five years at the helm? "At least ...," she replied.