News from Frostrow Capital

Close pulls out of investment trusts

by Scott Sinclair, 10 Apr 2007

Charges in three investment trusts formerly promoted by Close Investments have fallen after a new boutique firm was appointed to run the administrative and operational functions of the vehicles. Frostrow Capital, headed up by former managing director of Close Alastair Smith, will now carry out the day-to-day executive functions for the £250m Finsbury Worldwide Pharmaceutical trust, the £72m The Biotech Growth Trust and the £172m Finsbury Growth & Income trust.

The move has bought down the costs to investors in all three trusts. The total savings to investors through reduced administrative costs amount to £100,000 and £180,000 respectively in the Biotechnology and Growth and Income trusts, and £500,000 in the Pharmaceutical offering.

The new company is exclusively dedicated to performing the entire executive function for investment companies, with the exception of portfolio management. It aims to win mandates from investment companies whose boards prefer to separate the company management and investment management functions.

Grant Challis, partner in charge of business development at the new firm, said: “A lot of people are realising that small niche operators like us can run things like this cheaply, and having one organisation running the executive functions and another handling portfolio management gives trusts’ boards more scope for developing their offerings.”

Smith, Frostrow Capital’s managing partner, added: “We have assembled an excellent team of proven investment company specialists and are all very excited to be launching our new enterprise.”

There will be no change in the investment approach used to run the three trusts as a result of Frostrow Capital’s appointment, which follows in the wake of the decision by the board of the Finsbury Technology trust to appoint RCM, part of Allianz Global Investors, to manage the company’s assets and provide administration services.

Gavin Haynes, managing director of Whitechurch Securities, said the new appointment suggested Close Investments was realigning its business focus.

He added: “The key thing for investors is that the investment managers will not change.” Close Investments was launched last September by merging six businesses, including Close Finsbury Asset Management (CFAM) Reabourne Technology Investment Management and Close Investment.

Close Fund Management (CFM) became part of Close Investments last month. Stuart Alexander, managing director of sales and marketing at Close, said the firm had agreed to hand over the trusts following a strategic review.

“We are pulling away from back office procedures and with the trusts we were just the secretariat, and we don’t want to focus on that anymore,” he said. Meanwhile, shareholders recently agreed to wind up the Close Finsbury Eurotech trust at an extraordinary general meeting.