The Edinburgh Investment Trust Plc Annual Financial Report 2022 - Flipbook - Page 23
THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 21
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T he day-to-day management of the portfolio is the
responsibility of the named portfolio manager, James de
Uphaugh, Head of the Liontrust Global Fundamental team.
James joined Liontrust in April 2022 as part of the acquisition
of Majedie Asset Management where he was Chief Investment
Officer. He is a Fund Manager and Analyst with 34 years’
investment experience in UK and international equity markets.
James is responsible for co-managing the UK Equity Fund of
Liontrust and managing the Edinburgh Investment Trust.
T he risk that the portfolio manager might be incapacitated
or otherwise unavailable is mitigated by the fact that he
works within, and is supported by, the wider Liontrust team.
Moreover, Chris Field, as deputy portfolio manager, would be
able to manage the portfolio if James de Uphaugh was unable
to do so for any reason.
T he Board has set guidelines within which the portfolio
manager is permitted wide discretion. Any proposed variation
outside these guidelines is referred to the Board and
compliance with the guidelines and the guidelines themselves
are reviewed at every Board meeting.
EMERGING RISKS
The Board has put in place robust procedures to assist with
identifying emerging risks that arise from existing risks or from new
situations. The Board is kept informed through its advisors and
Manager regarding any political, economic or legal or regulatory
changes that affect the Company.
For example, there are currently a growing number of risks as
a result of emerging geopolitical factors that may translate into
greater stock market risk. These geopolitical factors include the war
in Ukraine, global supply chain issues and stagflation.
Physical and Transitional Climate Change
Globally, climate change effects are already emerging in the form
of changing weather patterns. Extreme weather events could
potentially impair the operations of individual investee companies,
potential investee companies, their supply chains and their
customers. Legislative changes are driving an economic adjustment
towards a low-carbon economy. There are considerable risks to the
value, business model and operations of investee and potential
investee companies due to stranded assets and how investors,
financial regulators and policymakers respond to climate concerns.
The Portfolio Manager takes such risks into account, along with the
downside risk to any company – whether in the form of its business
prospects, market valuation or sustainability of dividends – that
is perceived to be making a detrimental contribution to climate
change. Further details on the Portfolio Manager’s process for
managing climate risk relating to each portfolio holding is supplied
in the s.172 statement on page 24. The Company invests in a broad
portfolio of businesses with operations spread geographically, which
should limit the impact of location-specific weather events.
Pandemic (COVID-19)
There is a risk of re-emergence of future strains of COVID-19 or
other pandemics and lockdowns.
OTHER RISKS
The Company is subject to laws and regulations by virtue of its
status as an investment trust and is required to comply with
certain regulatory requirements that are applicable to listed
closed-ended investment companies. The Company is subject to
the continuing obligations imposed by the UK Listing Authority on
all companies whose shares are listed on the Official List.
The Manager reviews compliance with investment trust tax
conditions and other financial and regulatory requirements on
a daily basis with any issues being immediately brought to the
attention of the Board.
The Company may be exposed to other business, strategic and
political risks in the future, as well as regulatory risks (such as an
adverse change in the tax treatment of investment companies),
credit, liquidity and concentration risks. The risk control summary
report allows the Board to considers all these risks, the measures
in place to control them and the possibility of any other risks that
could arise.
The Board ensures that satisfactory assurances are received from
the service providers. The Manager’s compliance officers produce
regular reports for review by the Company’s Audit Committee.
Additionally, the depositary monitors stock, cash, borrowings
and investment restrictions throughout the year. The depositary
reports formally once a year and also has access to the Company
Chairman and the Audit Committee Chairman if needed during
the year.