CITY AND SUBURBAN
The trusts with a silent majority, and how to speak up
CHRISTOPHER FILDES
Odd and sad things are going on at Framlington, the unit trust group which deserves better, as indeed do its unit- holders. The first of them came in 20 years ago, when Laurence Prust the brokers started their own unit trusts for their clients. For most of those years Fram- lington Capital, the original trust, has outperformed all other general trusts, and Framlington's record has been consistently good. If there have been signs, lately, that the managers' eyes have been distracted from the ball, well might they be. Frani- lington two years ago took over the man- agement company of the Throgmorton Investment Trust, and three directors from Throgmorton came onto the board. It did not work out. The Throgmorton and Framlington sides quarrelled and dead- locked. Now Framlington has got a bid from Throgmorton Investment Trust. What happens next? There are three possi- bilities, and the unit-holders may not necessarily be best pleased with any of them. The bid may fail, and the deadlock continue. The bid may succeed — in which case the presumption must be that the Framlington funds will come' under new management. Or some third party may come along and outbid Throgmorton -- a white knight? Some knights are whiter than others. Companies which' manage fonds are not as profitable as they were be.- fore the crash last year, and their shares are correspondingly cheaper, but they can repre- sent a power base. Framlington unit-holders have no votes on any of this. Their ultimate sanction is to take their money somewhere else. Like so many sanctions, this looks better as a threat than as a promise — it would be expensive, in capital gains tax and in dealing costs: If they have insurance policies whose value is linked to Framling- ton units, they may not even be able to move. What they all need is the means of expressing their preferences in advance. That is not as straightforward as they may irnagine. Framlington is inhibited even in telling them what is going on, since the rules governing takeovers make it difficult to send out any document other than those which go out to all the shareholders. Those of Framlington's 100,000-odd unit-holders who want their money managed substan- tially as it has been managed, and by the same people, should write to the board and say that is what they want. No one else will speak for them.
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