Undervalued fund launched

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The Independent Online
SCOTTISH Value Management, the strongly performing Edinburgh fund manager run by Colin McLean, is seeking pounds 50m for an investment trust that will aim to invest in undervalued companies.

Undervalued Assets Trust will be the first of Scottish Value's investment trusts to invest in 'proper' companies with trading businesses. Its Scottish Value Trust invests in other investment trusts, while the Warrants and Value Investment Trust mainly buys trust warrants.

The new fund will use the same philosophy that underpins Mr McLean's management of the other two trusts. This assumes that stock markets frequently overreact, giving investors scope to buy shares for less than their true worth.

Mr McLean said TSB, the fund manager Invesco and British Airports Authority all provided good examples of the potential benefits of value investing.

A few years ago, the shares of BAA were badly hit by fears about the Gulf war, the potential loss of duty-free trade and the company's substantial property interests. 'You would have doubled your money in two years and trebled your money in three years,' Mr McLean said.

Mr McLean has been very successful with Scottish Value Trust, whose net asset value rose 74.2 per cent last year. Since it became an investment trust in July 1991, the fund has climbed 177.4 per cent, compared with a 66.8 per cent rise in the FT Actuaries investment trust index.

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