The first investment trust to launch in 2015 will come to the market later this month with Scottish connections.
New York activist managers Gamco Investors have been in Edinburgh and Glasgow attracting interest for a fund which they hope will appeal to the Scottish investment psyche.
Investing in ‘value’ US stocks, it will charge only 1per cent launch costs and a 1per cent management fee linked to the trust’s market value, while its partners headed by founder Mario Gabelli will take a 10per cent stake.
The Gabelli Value Plus+ Trust aims to raise £100m to £250m and will have former Aberdeen asset chairman Charles Irby on the board as well as veteran Scottish trust director Alex Hammond-Chambers, who is vice-chairman of Gamco
UK. Andrew Bell, chief executive at the Witan trust and recent chairman of the Association of Investment Companies, will chair the company.
Gamco, formed in 1977, manages around $50billion and uses a proprietary method of identifying undervalued companies, devised by Mr Gabelli who was a pupil of pioneering value investor Benjamin Graham.
Marc Gabelli, son of the founder and a senior portfolio manager, said on his visit to Edinburgh: “We have been told repeatedly that this is refreshing, a new fund but in an old well-proven strategy, a methodology that Scottish investors can certainly appreciate.”
He added: “We try to invest in great American companies at the right price, with some form of catalyst in place.”
Gamco takes an activist approach with many of its investments, engaging with firms to try to drive unlocking of value.
Mr Gabelli said the firm would absorb most of the cost of the public listing, expected to be on February 17, and envisaged an even split between institutional cash and private client investment.
The partners’ investment and the fee structure would provide an incentive not to let the trust slide to a discount, Mr Gabelli said.
Gamco says its technique has generated an annualised 15.9 per cent return against 11.8 per cent for the S & P 500 over the past 38 years.
The trust’s estimated total expense ratio is 1.23per cent and it closes for subscriptions on February 11.