Our guest writer Alice Rigby recently spoke with stalwart of the investment trust sector; Gervais Williams to speak about how thirty years in the industry has has informed his thinking. This informative article “A business icon” originally made an appearance on Kepler’s website. Gervais Williams is unarguably a stalwart of the investment trust surroundings. Since he started his career over thirty years as a trainee at Throgmorton ago, he has worked on investment trusts – and consequently his understanding of the structure is nigh on unrivaled on the market. As he says, “I learnt about the advantages of investment trusts from the very start”.
Despite Gervais’ advocacy, the death knell for investment trusts has been sounded by the industry many times over in the last couple of decades. Yet, trusts have survived – and, sometimes, thrived during that period. The existing flourishing of trust buying among retail investors is one particular phenomenon. What makes trusts so much more resilient than they are experienced by the industry pegged for? Gervais informs me: “trusts do evolve – they’re not similar vehicles they were 30 or 60 years back, and as clients evolve trusts can transform with them.
Of course, this evolution is partially fueled by the adjustable nature of the trust structure, where mandates and managers can be transformed in a transparent and pain-free way relatively. Gervais explained that is a key appeal of trusts. “Trusts work nicely for clients. Inside a conversation about investment trusts, it is unavoidable that planks should come up eventually. Having managed investment trusts for over 2 decades, Gervais has worked with his fair share.
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I asked him how he views the manager-board romantic relationship, and what he views as the characteristics of the greatest boards. “It’s important to have a collaborative relationship. Fund managers are there to generate performance for shareholders. But costs and the potential risks associated with debt are left for the board because they will impact the trust for the long term. Key to this, he says, is moving with the days. One of these that Gervais cites from his own career was the full case of the Gartmore Growth Fund, which launched annual redemptions as it was being challenged by arbitrage activity repeatedly. Ultimately, this is a measure that is introduced by many shows and trusts, as Gervais puts it, evolution of thinking.
In convert, as fund supervisor, Gervais has also at times pushed for the table to leverage the trust structure more creatively. For instance, he says “in 2006, we were very anxious about the overall economy and market valuations. We advocated to the board for the use of put options – we started off with 50%, which then rose to 100% protection in 2007 as our nervousness increased.
Gervais has continued this evolutionary theme into the next phase of his investment trust career at Miton Group, where he now manages two investment trusts – Miton UK MicroCap Trust as well as the Diverse Income Trust. Both trusts offer redemption mechanisms with their investors with an annual basis, which should help soft liquidity issues. “If we do have a build up of sellers, they can tick the package and know that their capital will be coming back to them in the coming weeks or weeks. And new buyers similarly know that there isn’t a backlog of retailers, waiting to drive down the talk about price.