Mr Duckett, an extrovert almost as well known in the Square Mile for keeping a black cab on permanent retainer, has ended his consulting deal with Warburg to help float two new "vulture" investment trusts. The trusts, Advance UK Trust and Advance Developing Markets Trust, hope to raise pounds 50m to pounds 100m each and will invest in other trusts, targeting poor performers whose shares stand at wide discounts to their underlying value. He will concentrate on the investment trust industry from his base at Marshall Securities, where he is a consultant. He is thus ending a curious arrangement for the City in which he was consultant for two firms - Marshall and Warburg.
The sector looks ripe for a shake-up, say analysts. Even Howard Miles of Warburg's own investment trust team reckons Mr Duckett's new venture may succeed: "These are products which I think will strike a chord with investors," he said.
During a stockmarket boom, investment trusts have performed poorly with new issues of emerging markets trusts doing notably badly. In the three years to 31 August, the FT-SE All Share index grew 40 per cent. The Investment Trust index rose by only 15 per cent, and average discounts have doubled from 6 to 12 per cent.
Managers have come under pressure to return the underlying full value of the assets to shareholders through winding up trusts, merging rival trusts or turning them into open-ended unit trusts.
Asked how Advance itself hopes to avoid the usual investment trust fate of seeing its own shares trade at a discount, Carlos Horner, a fund manager with Advance, said: "Shareholders will be offered a buy-back arrangement almost immediately." This mechanism is designed to keep the share price close to asset value.
The new trusts are backed not only by Marshall but, in a novel move, by the corporate finance team at Price Waterhouse.Reuse content