REG - British PortfolioTst - Change of investment manager

Tue Mar 6, 2012 2:01am EST

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RNS Number : 7292Y
British Portfolio Trust PLC
06 March 2012

6 March 2012


British Portfolio Trust plc (the "Company")


Announcement of the appointment of a new investment manager




The Board of British Portfolio Trust plc announces the appointment of a new investment manager (the "Appointment").


Background to the Appointment


The Company's current investment objective is to provide growth in capital and income over the long term through investment in a diversified portfolio of principally UK listed equities.  The Directors believe that the approach of focusing on companies capable of generating significant growth combined with a stable and rising level of income is what the overwhelming majority of shareholders are seeking.


Notwithstanding short periods of outperformance, the Company has exhibited overall underperformance against its benchmark when measured since inception. Against this background, the Board has undertaken a thorough review of the Company's management arrangements. Having conducted an extensive evaluation of options available to the Board, it is the Directors' firm belief that the Company, with its special history and unique shareholder base, should remain an independent investment vehicle with the objective of delivering outperformance over the long term.  The evaluation process, having crystallised this view, has resulted in the Appointment detailed below.


New Investment Manager


The Board has appointed BlackRock Investment Management (UK) Limited (the "New Manager" or "BlackRock") as the new manager of the Company in place of RCM (UK) Limited ("RCM"). BlackRock is a provider of global investment management services, with US$3.513 trillion under management across equity, fixed income, liquidity, alternatives, and asset allocation/balanced strategies for institutional and retail clients (as at 31 December 2011, Source: BlackRock).


It is the view of the Board that the Company under BlackRock management will be able to attract significant interest from new investors as it will represent an opportunity for them to access the management skills of the New Manager through a closed-ended vehicle.  The Board believes that BlackRock, with its considerable experience in managing equity portfolios, is well placed to achieve the Company's investment objective.   The fund will be managed on a day-to-day basis by:


Nick McLeod-Clarke, Managing Director and portfolio manager. Nick is a member of the UK Equity team in the Fundamental Equity division of BlackRock's Portfolio Management Group. He is co-head of the BlackRock UK Income Fund and is responsible for managing UK equity portfolios for retail and institutional clients.


Nick's service with BlackRock dates back to 2001, including his years with Merrill Lynch Investment Managers (MLIM), which merged with BlackRock in 2006. Prior to joining MLIM in 2001, he was co-head of UK Equities at Morley Fund Management, and head of Institutional Funds-UK Equities at Scottish Widows Investment Partnership.


Adam Avigdori, Director and portfolio manager. Adam is a member of the UK Equity team in the Fundamental Equity division of BlackRock's Portfolio Management Group. He is co-head of the BlackRock UK Income Fund.  Adam's service with the firm dates back to 2001, including his years with MLIM.


As at 31 December 2011, Nick McLeod-Clarke managed approximately £2,721m in UK equities including the BlackRock UK Income Fund. In addition to co-managing the BlackRock UK Income Fund with Nick, Adam Avigdori managed approximately £688m in UK equities (Source: BlackRock).


BlackRock's track record for its UK Income Fund is as set out below:



1 year

3 years

5 years

5 years annualised

BlackRock UK Income Fund* (AUM £740m)





FTSE All Share Index





Source: BlackRock as at 31 January 2012

*Accumulation unit, dealing bid to bid prices, net of expenses


New Investment Management Agreement


The Company served protective notice on RCM on 4 January 2012 and RCM is entitled to receive the base management fee and the administrative and secretarial fee under the existing management agreement until 4 July 2012, being the date of expiry of the notice.  No performance fee is payable on termination. 


The New Manager will take over the management, administration and secretarial services for the Company with effect from 1 April 2012 under the terms of a new management agreement ("New Management Agreement").  Under the New Management Agreement the benchmark index, which the Company will use both for performance comparative purposes and for calculation of the performance fee payable to the New Manager (described below), will remain the FTSE All Share measured on a Total Return basis.


The New Manager will be entitled to a base fee at 0.6% p.a. of the Company's market capitalisation, although the New Manager will not charge a base fee for the first 3 months of the management contract.  There is no additional fee for the Company secretarial and administration services. 


The New Manager will also be entitled to a performance fee for a financial period based on the Company's net asset value outperformance of the benchmark.  The performance fee will be calculated by applying 15 per cent of the excess return over the performance fee net asset value. 

The performance fee will be calculated on a geometric basis, that is the Company's return will be divided by the performance of the benchmark to derive an excess return from which the 15 per cent performance fee will be calculated.  The performance fee will be measured over a rolling three year period, although any excess return that exceeds the return used in calculating a particular performance fee as a result of the application of the cap (see below) may be carried forward and included in future performance fee calculations. Transitional arrangements are in place in respect of the initial periods building up to the first rolling three year period which will comprise the first three complete financial years following commencement of the New Management Agreement.

There are high watermark arrangements such that a performance fee will only be payable in respect of a given rolling three year period for which outperformance has been achieved if the fund has also achieved cumulative outperformance since the end date of the last period in respect of which a performance fee was payable.

The base fee and performance fee payable in respect of a financial period shall be capped at no more than 5% of the net asset value of the Company. 


The management contract will have an initial period of 12 months from 1 April 2012 followed by a rolling 6 month notice period. 


AIC classification

The Directors have reviewed with the New Manager the investment objective and policy of the Company and have concluded that the Company should in due course move to the AIC UK Growth & Income sector in line with the Company's focus on growth and income. 




The Company intends to seek shareholder approval to change its name to BlackRock Income and Growth Investment Trust plc in due course. 




Jonathan Cartwright, Chairman

Via: William Simmonds/Edward Gibson-Watt

 J.P. Morgan Cazenove

Tel.: 020 7588 2828


Jonathan Ruck Keene


Tel.: 020 7743 3000






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The company news service from the London Stock Exchange
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