Alliance sees opportunity in crisis

THE global debt crisis has a long way to run but has created an opportunity for investors to be “greedy”, the chief executive of Britain’s largest investment trust said yesterday.

Katherine Garrett-Cox of Alliance Trust, which runs £2.9bn of assets, criticised the “bailout botox” policy adopted in Europe, and said deleveraging would be a painful process.

She told City A.M., however, that the crisis created a buying opportunity.

“We are bearish on the macro picture but bullish on the micro picture.

Warren Buffett said you have to be greedy when everybody else is fearful. If you follow the herd and act like a sheep your rewards will get diluted.”

She was speaking as Dundee-based Alliance, which defeated a resolution from rebel investor Laxey Partners in May to set up an automatic buyback policy aimed at boosting its share value, reported its results for the six months to the end of July.

It reduced its exposure to equities – its core asset class – to 95 per cent of net assets at the end of July, from 99 per cent in June. It is now focusing on firms less exposed to Asia and the economic cycle. Alliance has reduced holdings in Informa, miner Xstrata and HSBC and bought higher-yielding firms with more reliable levels of demand such as publisher Pearson, National Grid and BG Group

UK equities were its largest asset class at the end of July – at 31.6 per cent – while North America stood at 24.5 per cent. European interests make up 12 per cent.

Alliance’s share price rose 3.1 per cent in the six months to July, while its net asset value per share climbed 0.7 per cent. It said third-party assets at its asset management arm have grown by almost 50 per cent to £123m since the start of the year.