To mark Temple Bar’s centenary, the investment trust historian John Newlands has written a history of the trust. The full book will be available on our website in due course. What follows is a condensed account of some of the key events in the trust’s first hundred years, told through the people who shaped it.
Sir Alexander Roger and the trust’s telephonic roots
For its first 34 years, the trust was dominated by one man. Sir Alexander Roger, a self-made Aberdonian businessman, was already chairman of British Insulated Cables and The Automatic Telephone Manufacturing Company when the trust, originally called ‘The Cable, Telephone and General Trust’, was incorporated on 24 June 1926 – just weeks after the General Strike, during which he was called away by the government to take charge of the London docks.
A towering figure in the field of telephony, Roger foresaw the surging demand for automatic systems to replace manual telephone exchanges, at home and around the world. When Poland agreed in 1932 to convert its network, one of his companies supplied the cable, another installed the exchange equipment, and the trust financed the greater part of the deal. The pattern appears to have been repeated again and again.
This was all set against the uncompromising backdrop of the Great Depression. Yet the Wall Street Crash of 1929 had presented the young trust with as much of an opportunity as a threat – a key lesson of the crash and its aftermath was that the financial and business world needed more, and far better, communications.
Dividends continued without a break through the Second World War, but a change of direction came soon after. Clement Attlee’s Labour government nationalised Cable & Wireless in 1947, and telephone exchanges overseas were starting to come under government ownership too. For a trust specialising in public utilities, this was an unhelpful development.
In response, and encouraged by tax changes that favoured dividends from shares over income from bonds, Roger set about reducing the trust’s dependence on telephone exchanges and building, in its place, a diversified portfolio of UK-listed industrial shares. The shift was brought about by outside events, but it had a positive effect as the great post-war equity boom gathered pace.
A change of name, and ‘The Prof’
Roger retired in 1960 and was succeeded by his son, Alastair, who continued the move away from telephony. The last telephone operating company, in Jamaica, was sold in 1967, leaving the trust entirely invested in quoted securities under what was now a rather inappropriate name.
That same year, the trust moved its offices to Electra House, on Victoria Embankment. The Electra House Group provided secretarial and administrative services to a number of investment trusts, one of which was a very small vehicle, formed in 1931, called Temple Bar Investment Trust. In 1976, a deal was struck to combine the two, and on 19 August 1977, the older and larger trust took the smaller one’s name.
Professor Roland Smith had joined the board in 1975. Over his career, he chaired Harrods and House of Fraser, British Aerospace and, most famously, Manchester United. Known around the City as ‘The Prof’, he was chairman of Temple Bar from 1980 until 1999.
One notable event of his chairmanship came in September 1992, when Barclays de Zoete Wedd, the owner of 5% of Temple Bar’s shares, made a hostile bid – not for the trust’s assets, but for the contract to manage them, then held by Guinness Flight. Smith fought hard, citing legal ambiguity and using his reputation as one of the UK’s most combative corporate heavyweights to persuade institutional shareholders to reject the deal.
Chris Burvill and the arrival of value
The bid failed. In its wake, and almost certainly because of it, Guinness Flight gave overall responsibility for the portfolio in 1993 to Chris Burvill, a 34-year-old recruited from Commercial Union specifically for the task. With hindsight, this was the point at which Temple Bar’s long association with the value investment style began.
Burvill set out his philosophy in an interview with The Times a few years later, in words that will sound familiar to shareholders today. He was looking, he said, for undervalued companies with a realistic chance of becoming more expensively rated. “Isn’t everyone? Well actually, no. Many investors ignore cheap shares because they are worried about the current trading outlook. We try to look beyond that.”1
The internet bubble of the late 1990s brought the toughest of times for value managers. Yet as the boom surged and then collapsed, the trust outperformed the FTSE All-Share Index in each of the three years from 2000 to 2002.2
Alastair Mundy and the search for friendless stocks
In the second half of 2000, Alastair Mundy joined the team as Burvill’s assistant. Less than two years later, the board – not to mention Mundy himself – was surprised to learn that Burvill had been poached by Gartmore. Thrown in at the deep end, Mundy went on to manage Temple Bar for the next 18 years.
He came to be recognised as one of the UK’s most disciplined and uncompromising contrarian value investors, typically considering only stocks that had underperformed the market by at least 50% over the previous seven years. “We will continue our search for friendless stocks,” he wrote in 2004, “in the expectation that their popularity will increase over time.”3
Under Mundy, the trust went on to outperform over many years, growing in size and in standing as it did so. The global financial crisis – one of the most difficult market phases since the 1970s – interrupted that progress, but Temple Bar came through it well. By 2016, Trustnet was reporting that the trust had comfortably beaten both its benchmark and its peers under his management.4
The years after 2016 became more difficult for value investors, however, as capital, seemingly indifferent to valuation, continued to flow into growth stocks. Then came Covid.
Ian Lance, Nick Purves and a socially distanced beauty parade
The challenging market conditions that ensued as the pandemic swept across the world took their toll on the trust. In April 2020, Mundy was granted an extended leave of absence. He had, as the then chairman, Arthur Copple, later put it, “served your company with great dedication over very many years”.5
The board determined that it was time to act, and appointed Stanhope Capital to conduct a strategic review, not just of the trust’s management arrangements but also of its investment style.
With pandemic restrictions in place, most of the review’s meetings were held by video call. That summer, however, a shortlist of prospective managers, spanning a range of investment styles, was invited to present face to face – in the back garden of one of the directors, where social distancing could be observed. Ian Lance and Nick Purves of Redwheel were among them.
The board’s deliberations proved genuinely difficult. Not everyone advising the process was persuaded that value remained the right answer, and it would have been considerably easier to follow the prevailing fashion. But the board took the view that the case for value investing remained robust, and that a period of underperformance, however painful, did not mean the discipline itself had failed.
Among the value managers it had considered, Lance and Purves were the standout choice. Having already worked together for nearly 15 years, they were appointed with effect from 30 October 2020 and swiftly set to work, seeking sound businesses whose shares they believed were, for one reason or another, modestly valued. Within days, news of a successful Covid vaccine heralded a major rally in value stocks. The timing was fortunate, perhaps. But in the years since, the trust has outperformed its benchmark, and the board’s decision to stick with value has been rewarded.6
A hundred years and counting
An article of this length cannot do justice to everyone who has played a role in Temple Bar’s history. Some fifty directors have served on the trust’s board over the past hundred years, and the full book finds room for them – as it does for episodes we have had to pass over, from the Kansas City undertaker who invented the automatic telephone exchange to the wartime annual report that shrank to a single folded sheet of paper.
John ends his history with the advantages the trust has enjoyed throughout – permanent capital, a closed-end structure, skilled active management and a watchful, independent board – and concludes that, with them, Temple Bar can survive and thrive for another hundred years and more. We hope that shareholders feel the same.
Past performance is not a guide to the future. The price of investments and the income from them may fall as well as rise and investors may not get back the full amount invested. Forecasts and estimates are based upon subjective assumptions about circumstances and events that may not yet have taken place and may never do so.
No investment strategy or risk management technique can guarantee returns or eliminate risks in any market environment. Nothing in this document should be construed as advice and is therefore not a recommendation to buy or sell shares. Information contained in this document should not be viewed as indicative of future results. The value of investments can go down as well as up.
This article is issued by RWC Asset Management LLP (Redwheel), in its capacity as the appointed portfolio manager to the Temple Bar Investment Trust Plc. Redwheel is authorised and regulated by the UK Financial Conduct Authority and the US Securities and Exchange Commission.
The statements and opinions expressed in this article are those of the author as of the date of publication.
Redwheel may act as investment manager or adviser, or otherwise provide services, to more than one product pursuing a similar investment strategy or focus to the product detailed in this document. Redwheel seeks to minimise any conflicts of interest, and endeavours to act at all times in accordance with its legal and regulatory obligations as well as its own policies and codes of conduct.
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The information contained herein does not constitute: (i) a binding legal agreement; (ii) legal, regulatory, tax, accounting or other advice; (iii) an offer, recommendation or solicitation to buy or sell shares in any fund, security, commodity, financial instrument or derivative linked to, or otherwise included in a portfolio managed or advised by Redwheel; or (iv) an offer to enter into any other transaction whatsoever (each a Transaction). No representations and/or warranties are made that the information contained herein is either up to date and/or accurate and is not intended to be used or relied upon by any counterparty, investor or any other third party. Redwheel bears no responsibility for your investment research and/or investment decisions and you should consult your own lawyer, accountant, tax adviser or other professional adviser before entering into any Transaction.
1 Source: The Times, 22 June 2006
2 Source: Temple Bar Annual Report, 2000-02
3 Source: Temple Bar Annual Report, 2003
4 Source: Trustnet, 15 January 2016
5 Source: Temple Bar Annual Report, 2020
6 Source: Temple Bar Annual Report, 2025
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