She said: “Led by the prior soundings with shareholders, we announced that we intended to provide an option to remain invested in a global strategy with clear impact objectives. It was also important that any solution should address the size of the company, the low liquidity in the shares and the discount at which they were trading.
"With our advisors we have now considered the options available to the company, including a small number of proposals received from third parties, and have concluded that a rollover option into the Baillie Gifford Positive Change Fund, with a full cash alternative, is optimal.”
How we got here
It has been an eventful five years for investors in the Keystone investment trust.
In 2020 it was a UK value equity product run by the UK equity desk at Invesco.
UK value equities were starkly out of favour in the years running up to, and during the pandemic.
Brade and her colleagues on the Keystone board opted to abandon the UK equity strategy and instead award the mandate to Baillie Gifford to run with a focus on global equities and sustainability.
Ben Yearsley, director at Fairview Consulting said the timing proved unfortunate.
The year in which Baillie Gifford began running the money (2021) marked the peak of performance for the growth style of investing, the outperformance of sustainable-focused funds, and the beginning of a period of outperformance for UK and value equities.
Brade said: “We undertook an extensive review co-ordinated by an investment consultant and considered a wide range of strategies. Once we settled on a global strategy with a sustainable/impact overlay we held a beauty parade which led to the decision to appoint the Baillie Gifford Positive Change team.
"The response from investors when we announced the change in strategy and the manager in late 2020 demonstrated the widespread support for the decision. "
She added: "We believed the strategy was well suited to the Keystone investment trust structure which would enable the managers to access the significant impact opportunities available from committing primary capital to private companies and investing in less liquid public companies.
"However we now recognise that the company has not received sufficient support from shareholders to allow the strategy the time needed to play out over the period to the February 2027 continuation vote we recently introduced.”
david.thorpe@ft.com
