By Charlie Parker

London (Citywire)

Alliance Trust's chief investment officer Katherine Garrett-Cox is widely tipped to take over as chief executive when Alan Harden leaves in October, but analysts are divided over where she should take Britain's largest investment trust.

Harden joined the Dundee-based trust in 2003 and set about a process of rapid change which included integrating Alliance with its smaller mirror fund, Second Alliance. He also introduced plenty of fresh blood to the fund management team surprising shareholders at the most recent annual general meeting by asking a whole row of suited and booted new fund managers to stand up. HIs most significant appointment though was to bring in Morley chief investment officer Katherine Garrett-Cox as the firm's CIO and group executive director.

Garrett-Cox, who brings with her considerable management experience following her time running the hoards of investors at Morley, is now widely tipped to replace Harden when he leaves in October. He will move to lead ING Investment Management in the Asia-Pacific region.

But while Harden will be able to add a wide range of achievements to his CV from his time at Alliance and boast of ambitious plans laid for a fund supermarket and open-ended fund business the work is by no means complete and most crucially has yet to impact on the investment trust's actual share price performance, surely the test of any investment trust leader.

Nick Sketch, director of investment research at Rensburg Sheppards, argues argues that this remains the most crucial issue facing the trust. 'The big issue is that we have seen a doubling of the total expense ratio but no added value. Investors want to know how long they have to wait before they see the money coming through. If they are building a business as a financial provider when will be wee that come through on the revenue stream.

'Bill Clinton had that saying 'It's the economy stupid!, well for Alliance it is 'it's the performance stupid!' When I look at Alliance I am not seeing the impact of all the extra resources actually turning around performance which is surprising because they went bearish on equities quite early.'

Over the past three years the share price of the company has risen by 12.93%, just nudging above FTSE WI World's return of 12.04%. But over the five years since Harden was appointed it has significantly underperformed, returning 33.03% versus the index's 46.46%. In net asset value terms it has outperformed over five years, returning 51.41% versus 46.46% from the index. It has also significantly underperformed its sector of global growth trusts, not by any means a group of market-leading funds.  Continued...