Scottish Investment Trust: shareholders call time after 134 years

End of an era as shareholders approve the merger of Scottish Investment Trust and JPMorgan Global Growth & Income.

Today, shareholders called time on 134-year-old The Scottish Investment Trust (LSE:SCIN).

After years of lacklustre performance, Darwin’s survival of the fittest premise finally played out. Illustrating the years of history that have now been called to a close, Darwin died just five years before this once-trailblazing trust was launched.

The trust still occupies the same address that the company bought, ‘at a very moderate price’ in 1889 - 6 Albyn Place in Edinburgh. So it is impossible not to feel a sense of poignancy and sadness, despite the inevitability, of today’s vote.

Kyle Caldwell, Collectives Specialist at interactive investor, says: “Self-directed retail investors are becoming more and more influential on investment trust shareholder registers. To attract and retain these investors, pedestrian performance is becoming much harder for boards to tolerate. After all, boards want an investment trust’s assets to grow and have scale. If performance does not keep investors sweet, they are free to leave at any time.

“Given this backdrop, I am not surprised to see shareholders approve the merger of Scottish Investment Trust and JPMorgan Global Growth & Income (LSE:JGGI). It has been a prolonged period of underperformance for Scottish’s shareholders. Its ‘ugly duckling’ strategy of buying out-of-favour shares has not paid off over short and long time periods.

“While the merger was not unexpected, and probably the right outcome, it is a sad end of an era. This is a trust with a strong retail shareholder base, which has been handed down through generations. In largely retail-owned investment trusts, like Scottish, retail investors have a better chance of making their voices heard.

“The trust, launched in 1887, essentially started out as an adventurous, emerging markets fund, investing principally in the railway boom in the Americas. The earliest shareholders were generally professional men, mostly in financial services, but also doctors and church ministers. But working people – women as well as men – also formed part of those early investors, including a baker, a grocer, a house painter, a schoolmistress and a butler. And investment trusts continue to be perfect vehicles for people with a range of budgets today.

“Self-managed trusts have been declining in number. With the growing army of self-direct retail investors, the model faces an uphill struggle to compete against the big investment giants to win over new investors. The larger firms have deeper pockets to raise their profile and greater resource to manage assets, in a bid to attract new investors.”