Asset management strategies of British Investment Trusts Companies, 1920-1928.

This dissertation examines the institutional investors’ asset management policies in the 1920s in the UK, focusing on the Investment Trust Companies’ (ITC) investment strategies. It asks: (1) what are the asset management strategies of the ITCs? (2) what were the main changes in their portfolios and what were the main causes for them? and (3) what was the interaction between the ITCs and societies? It uses a combination of quantitative and qualitative methodology, constructing an appropriate, hand-collected dataset, and it finds that ITCs used a combination of a) passive management, focusing on a naïve diversification and b) an active management top-down approach. Despite seismic changes at the economic, financial and social level, the ITCs maintained diversification as a key tool in their portfolio selection process. They used professional management to secure the clients’ savings. The main changes in the ITCs portfolios that this thesis reveals are a) the total withdrawal of the US market, b) its replacement with European and British securities, as well as c) the maintenance of their Latin American assets. Additionally, they transformed their asset allocation applying various financial innovations. These rearrangements cannot be considered in a social and political vacuum. This thesis examines these affairs during the 1920s, arguing that the ITCs were flexible institutions, formidably well informed about anything that could affect their investments; finally, they took full advantage of any financial opportunity that arose. Overall, the ITCs were in the vanguard of financial innovation, offering valuable lessons for the modern tumultuous period.