When Witan Investment Trust was set up in London nearly a century ago, it had one main client: the Henderson family, whose wealth came from land holdings and the City. Alexander Henderson, the first Lord Faringdon (18501934), was a prominent financier who promoted railways and had a hand in creating the modern Cazenove. To manage the Witan trust's assets and look after the Henderson estate, the family founded an eponymous investment firm. The arrangement was convoluted, as befits a City legacy, but it kept both money and management in the family.
Until last month, that is. In a break with family tradition, Harry Henderson, 52, the chairman of Witan and the great-grandson of Alexander, announced that the trust would hire outside managers for the first time. In a move masterminded by the CEO of Witan, Jim Horsburgh, 46, the trust has hired five firms to run 45 percent of its assets. Henderson Global Investors, as the old family investment firm is now known, will still look after 55 percent, which is invested predominantly in U.K. enhanced-index products.
"We decided to use enhanced indexing in the most mature and efficient markets, where active managers find it difficult to beat their benchmarks, but to take more risk in other parts of the portfolio," explains Horsburgh, who once headed Schroders' institutional business. The impetus for this bold initiative was nothing as dramatic as a breach in the family (although the second Lord Faringdon was known to entertain socialist politicians at the family seat); it was poor performance by HGI. London-listed Witan's discount to assets has been running at close to 20 percent, and the theory is that mixed managers ought to do better.
"It was fascinating to meet so many talented managers and try to understand how they manage money," says Horsburgh, a University of Edinburgh graduate. "I'm sure if it had been possible to do it earlier in my career, I would have been a much better investor."
For his part, the first Lord Faringdon might have been a little disappointed that the family-founded investment firm had lost its status as the sole manager of Witan trust assets, but he would have been gratified at how both Witan and HGI have prospered over the years. The former now has £1.4 billion ($2.5 billion) in assets and 56,000 private investors, ranking it No. 2 among British investment trusts; HGI, meanwhile, manages about £71 billion.
