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Keystone Investment Trust Plc (KIT)

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Monday 07 December, 2020

Keystone Investment Trust Plc

Statement re Proposed Change of Inv Objective and Policy

Keystone Investment Trust plc

Proposed Change of Investment Objective, Policy and Management Arrangements

7 December 2020

The Board of Keystone Investment Trust plc (the "Company") announces that it has decided, subject to contract and to shareholder approval, to appoint Baillie Gifford & Co Limited ("Baillie Gifford") to manage the Company using its Positive Change investment strategy, a global equity strategy which seeks to provide attractive investment returns while contributing towards a more sustainable and inclusive world.

Karen Brade, Chair of Keystone Investment Trust plc, commented:

“Following an extensive review of the Company's strategic direction and after a competitive tender for its investment management arrangements, we are pleased to propose Baillie Gifford’s successful Positive Change strategy, tailored to take advantage of the Company’s investment trust structure.

We were impressed by the Positive Change team’s strong ethos, investment process and performance record, and by Baillie Gifford’s enthusiasm to reposition the Company for long term success. We now aim to deliver attractive returns through investing in companies addressing critical challenges in areas such as healthcare, education, social inclusion and the environment, and to meet the demands of a wide range of investors who are seeking opportunities to invest in solutions to global challenges.”


Earlier this year, the Board appointed Stanhope Consulting to advise on strategic options for the Company. Given a number of challenging structural trends, the Board started to question whether a UK focused mandate enables investors to capture the most compelling investment opportunities or makes best use of the Company’s investment trust structure. The Board decided to investigate a fundamental change of approach for the Company, moving to a global all-cap strategy and adopting a comprehensive commitment to achieving positive impact, and interviewed some of the leading investment management groups in the impact and sustainable investing sector. Baillie Gifford presented the most compelling proposal and, having consulted the Company’s major shareholders, the Board today announces its intention to appoint Baillie Gifford to implement the Positive Change strategy.

Change of Investment Objective and Policy

It is proposed that, subject to shareholder approval, the Company's investment objective be changed to incorporate two equally weighted objectives:

  • generate an attractive investment return for shareholders over the long term - expressed as the NAV total return exceeding that of the MSCI AC World Index in Sterling terms by at least 2% per annum over rolling five-year periods; and

  • contribute towards a more sustainable and inclusive world by investing in the equities of companies whose products or services make a positive social or environmental impact.

It is further proposed that, subject to shareholder approval, the Company's investment policy be changed as described below to create a differentiated strategy, utilising the benefits of the Company’s investment trust structure:

  • an active, long term, global equity strategy;

  • a best ideas portfolio typically invested in 30 to 60 securities;

  • exposures to both listed and unlisted securities:

    • for listed securities, companies with a minimum market capitalisation at the time of investment of $500m, significantly below the $1bn threshold for Baillie Gifford’s Positive Change open-ended fund; and

    • for unlisted securities, a target of achieving a 5-10% allocation within three years (with a maximum allocation at the time of investment of 30%); and

  • an ability to deploy gearing (not to exceed 10% of NAV at the time of drawdown).

Change of investment management arrangements

The Board has agreed, subject to contract, to appoint Baillie Gifford as the Company's AIFM, company secretary and administrator. The appointment of Baillie Gifford will also be conditional upon shareholders voting in favour of the new investment objective and policy and regulatory approval.

Baillie Gifford is an independent fund manager with approximately £287 billion under management as at 30 September 2020 and is the largest manager of UK listed investment companies by assets, managing 12 investment companies.

Baillie Gifford’s Positive Change strategy has dual objectives: to generate attractive investment returns and contribute towards a more sustainable and inclusive world. Since its launch in January 2017, Baillie Gifford has made strong progress towards delivering on both objectives. The Baillie Gifford Positive Change Fund has returned 33.5% p.a. net of fees compared to the MSCI ACWI Index return of 9.5% p.a. (3 January 2017 – 30 September 2020). Assets under management in Baillie Gifford’s Positive Change strategy were in excess of £2 billion as at 30 September 2020.

Baillie Gifford’s dedicated Positive Change team consists of seven investment and impact professionals. The Positive Change team are supported by four Portfolio Advisors based in other investment teams at Baillie Gifford.

Kate Fox and Lee Qian will manage the portfolio on a day-to-day basis. Kate joined Baillie Gifford in 2002 and is an Investment Manager and co-manager of the Baillie Gifford Positive Change Fund, as well as a Partner of the firm. Lee joined Baillie Gifford in 2012 and is an Investment Manager and co-manager of the Baillie Gifford Positive Change Fund.

The Baillie Gifford Positive Change Fund can only invest in public companies, which tend to be more established businesses. Baillie Gifford believes that impact investing through listed equities is important in providing scalability and accessibility, and the value of patient ownership cannot be understated. However, Baillie Gifford also believes that a significant number of private companies have the potential to fit with the Positive Change philosophy. Investing in those businesses could deliver strong investment returns and enhance impact because capital goes directly towards earlier stage businesses, helping them to invest in research, hire people and grow their operations. Peter Singlehurst, head of Baillie Gifford’s Private Companies team, will support the Positive Change team on private company investments.

Baillie Gifford will be paid an annual management fee, covering AIFM, company secretarial and administration services, based on the Company’s market capitalisation to enhance alignment with shareholder returns. The fee will be 0.70% on the first £100 million of market capitalisation, 0.65% on the next £150 million, and 0.55% thereafter. The management fee will be waived for the first six months of management. There will be no performance fee provisions. The notice period in respect of the management agreement will, after an initial transition year, be three months.

Baillie Gifford has also agreed to make a significant marketing contribution to the repositioning of the Company and will also fund all investor marketing activity undertaken on behalf of the Company during the first year of its management.

The Board believes that the change in investment manager and the adoption of the Positive Change strategy provide the scope for improved future long term performance and a solid base from which the Company can attract new investors and grow.

The Board thanks James Goldstone, the Company’s Portfolio Manager, for his commitment since 2017 and Invesco for its long-standing services.

Change of name

The Board intends to change the name of the Company to Keystone Positive Change Investment Trust Plc, as it believes that shareholders will benefit from association with the Positive Change brand, especially in respect of attracting new investors. The change of name is expected to become effective at the time of Baillie Gifford's appointment and is subject to the new investment objective and policy being approved by shareholders.


The Company’s current investment objective is to provide shareholders with long-term growth of capital. Due to the composition of the portfolio, shareholders have also received a consistent dividend yield. The proposals, if approved by shareholders, will result in returns from the portfolio being generated predominantly from capital growth. The current level of dividend will therefore not be covered by the future investment income and the Company expects to pay a significantly lower level of dividend, after a transition period of approximately 12 months during which the Board intends to utilise the Company’s reserves to support the dividend.

Discount and Premium Management

The Board will continue to review the discount or premium to NAV at which the Company’s shares trade and, recognising the context of a new investment objective and policy being implemented, will consider and discuss with major shareholders the need to address any short-term imbalance of demand and supply through a return of capital, or buyback or issuance of shares. Additionally, the Company will put in place a discount and premium management policy with a view to limiting any longer-term volatility of shareholders’ share price returns relative to the Company’s NAV.

Expected Timing

The proposals are subject to shareholder and regulatory approvals. A circular with further details of the proposals is expected to be published in mid-January 2021, with implementation of the new investment objective/policy and management arrangements expected following the Company’s AGM to be held on 10 February 2021.


For further information please contact:

Keystone Investment Trust plc

Karen Brade

Via Numis

Numis Securities

Nathan Brown, tel. +44 7795 964 870

Important Information

This announcement contains information that is inside information for the purposes of the Market Abuse Regulation (EU) No. 596/2014.  The person responsible for arranging for the release of this announcement on behalf of the Company is Shilla Pindoria of Invesco Asset Management Limited.

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