News from Frostrow Capital

Former Close MD takes three trust mandates to start-up

by Aimee Savage, 16 Apr 2007

Start-up firm Frostrow Capital, run by former Close Finsbury MD Alastair Smith, has taken three investment trust mandates from his old employer.

The company, which launched on 10 April, will focus on secretarial, marketing and administration services for investment trusts. Smith, also former head of investment trust operations at Schroders, left Close Investments in September 2006.

At Frostrow, he has been joined by the remaining members of the Close’s investment trust team, including Grant Challis, Mark Pope and Tracy Arthur.

The boutique firm has won the mandates for three Finsbury investment trusts, totaling £494m in size, although the vehicles will all remain with existing managers.

The trusts coming under Frostrow are Finsbury Growth & Income, run by Nick Train of Lindsell Train, Worldwide Pharmaceutical under OrbiMed Adviser’s Samuel Isaly, and Emerging Biotechnology, co-managed by Richard Klemm and Geoffrey Hsu.

Train’s vehicle invests in shares of larger UK companies, aiming to provide a total return greater than the FTSE All-Share index.

Finsbury Worldwide Pharmaceutical, which launched in 1995, consists of a global portfolio of pharmaceutical and biotechnology stocks.

Frostrow Capital will work with Close to achieve a smooth handover. There are no immediate plans to alter the Finsbury branding.

Smith confirmed that management costs will significantly reduce as part of the changes.

He said: “The three companies will pay us less in management fees than they did Close. TERs will therefore be reduced and the cost saving will be passed on to the shareholder.”

Challis, partner at the firm said: “We believe there is a real need for a boutique approach to managing investment companies. Virtually all investment trusts are administered by specialist fund managers who would rather be spending their time picking stocks or it is a non-core activity within large houses.

“In neither case are shareholder interests likely to be as well served.” The three trusts will continue to be available for investment within the Close Investments Isa, Pep, Savings Scheme and MileStones Plan.

Meanwhile, Frostrow also plans to launch trusts and other closed-ended funds for European investment boutiques seeking a vehicle with a London-listing. Close Investments has confirmed it will no longer offer dedicated management, administration and company secretarial services to UK investment trusts.

The exception will be where Close Investments owns the intellectual capital of the portfolio management underlying any future launches, according to Stuart Alexander, sales & marketing managing director at Close Investments.