Alliance Trust, the £2.2 billion investment trust, stands accused of failing investors because its board of directors has failed to respond to the concerns of its shareholders, according to one of the UK’s most respected fund managers.

Peter Spiller, principal of CG Asset Management (CGAM) and manager of Capital Gearing Trust, highlights Alliance as a glaring example of falling corporate governance standards in the investment trust industry.

Spiller’s comments come at the end of the initial offer period for CGAM’s new open-ended fund, CG Capital Value Fund, which plans to gain exposure to equities by investing in investment trusts trading at high discounts to net asset value (NAV). Alliance Trust, a constituent of the FTSE 100 index, is unlikely to be on his list of targets.

‘The Alliance board is very unresponsive to the welfare of its shareholders,’ says Spiller. ‘There is a big difference between the management of its assets, which is adequate, and the board’s management of the company, which has been very poor.’

Alliance’s share price discount to NAV is 19.4 per cent compared with an average 9 per cent in the global growth sector, and the board has consistently rejected calls to introduce measures to reduce it.

Spiller adds: ‘Corporate governance in the investment trust industry is deteriorating. Promises on reducing discounts are not being met and, on the quiet, we may be able to improve on that. We now have a bit more money to back our case.’

That amount currently stands at £90 million, the sum raised from existing clients of CGAM who were given first option to invest in CG Capital Value during the two-week initial launch period that ended on 4 June. Thereafter, new applicants face a 1 per cent levy. The minimum investment is £100,000.

CG Capital Value will invest in a broad range of assets, including inflation-linked bonds, conventional government and corporate bonds, plus anything from loan stock to preferred shares and convertible loans.

In that sense it resembles an earlier Spiller offering, the CG Portfolio Fund, with one important difference. Like CG Portfolio, Capital Value’s equity holdings – initially, some 15 per cent of its portfolio – will be made up of investment trusts, but the latter’s will be slanted to larger, more liquid investment trusts.

‘Trusts valued at more than £150 million,’ Spiller confirms. ‘Below that level, the other CGAM funds will have priority.’ This brings in Capital Gearing – by some way the UK’s most successful collective investment fund over the past 30 years – with a compound annual growth rate of almost 20 per cent.

CG Portfolio, in comparison, has risen from a 2001 launch price of £100,000 to £121,000. During this time, says Spiller, the stock market has risen by 5 per cent.

His other funds are CG Real Return, which is up by 71 per cent (excluding dividends of some 2 per cent a year) since its 2004 launch, and CG Dollar Fund. This is now around 20 per cent higher than its 2009 offer price and has made impressive gains in US inflation-proofed securities.