MONEY MAIL: Performance row hits investors

By CHARLOTTE BEUGGE FOR MAILONLINE
Updated: 16:44 EST, 8 January 2010

Nearly 16,000 loyal investors who make regular savings into one of Britain's larger investment trusts are being unceremoniously dumped because of a row about performance.

Those affected are the 15,897 investors who make regular monthly savings into the £238million Foreign & Colonial Eurotrust, the largest UK investment trust dedicated to European companies.

It includes those using the fund for their Isas, pensions and Child Trust Funds.

With investment trust boards answerable to their shareholders - the ordinary investors - the onus is on them to make sure performance is as good as possible

Last month the board of the trust sacked Foreign & Colonial as managers of the fund, after years of underperformance.

From February 1, it will be renamed as the European Investment Trust and its investment management will be taken over by Edinburgh Partners, a boutique investment firm.

The board of a trust sacking its management company is an unusual occurrence.

But with investment trust boards answerable to their shareholders - the ordinary investors - the onus is on them to make sure performance is as good as possible.

According to figures from Morningstar, Eurotrust is up 25.8pc over a year, in a sector where the average European investment trust made30.8pc.

The best performer, Jupiter European Opportunities, is up 56.6pc.

Over three years, Eurotrust is the poorest performer, losing its investors 22pc, compared with the average fund that made 1.64pc. Over five years, it's again the bottom performer, making just 26.7pc: the average European investment trust made 74.4pc over the same time period.

So, a change in management would seem to be a good idea for investors.

But those who have been saving regularly into the fund are soon going to have to find another home for their investments.

Because F&C is no longer managing the fund, it will no longer let those with Eurotrust stock keep their shares in its savings scheme.

In a letter to investors, F&C's head of investment trusts, Mike Woodward, writes that with effect from February 1: 'Eurotrust will cease to be an investment option in our savings scheme.

'This means that we will stop accepting any new contributions into Eurotrust and that you will need to let us know what you want to do with the shares that you currently hold in your plan.'

A spokesman for F&C said that it will soon be writing to customers to ask what they want to do with their investments.

However, Tim Cockerill of wealth managers Ashcourt Rowan, said that investors should look at other funds for regular saving.

'If they really want Europe, then I would look at BlackRock European Dynamic, Gartmore European Select Opportunities or Cazenove European.

'However, if I was young and was investing for the long term I would be tempted to put my regular savings into emerging markets funds such as the Chinese and Indian funds offered by Jupiter and First State.'