Which trust directors have put their money where their mouth is?

Nearly a fifth of investment trust directors do not invest in their own companies, the latest ‘Skin in the Game’ report by broker Collins Stewart has revealed.

The annual research shows 18.5% of directors have not invested a single penny in the companies they oversee.

Collins Stewart added a third of investment trust chairman have personal investments which are less than their annual salary, while 20 have no investments in their companies.

Jean Claude Banon, chairman of Henderson European Focus trust, has never invested in the company despite sitting on the board for the past two decades. He is the longest serving director who has not parted with any cash into his own company.

The report found 29 investment company boards whose total value of directors' shareholdings is less than six months remuneration.

The Neuberger Berman Global Floating Rate Income fund, which raised $500m when it launched last year, has no investment by any of its directors.

Alan Brierley, an analyst at Collins Stewart, said investors are entitled to ask the question: ‘why isn't your own company good enough for you to invest in?'

"Although there is significant investment, the lack of shareholdings by many is disappointing and there should be a greater commitment," added Brierley.

The report also shows 35 board members have personal investments in excess of £1m.

Lord Rothschild is top of the pile, investing £223m in RIT Capital Partners.

Fund managers have also injected huge amounts of capital into their own vehicles, with high profile names such as Fidelity's Anthony Bolton and Jupiter's Alex Darwall personally investing seven figures in their own trusts.

Darwall, Artemis' John Dodd and Alliance Trust's Katherine Garrett-Cox are also names on the list of 37 managers who have back their own trusts with more than £500,000.

Christopher Mills, manager of the North Atlantic Smaller Companies trust, heads the list with a £31m investment.

The total investment by boards and managers in this report in the closed-ended space stands at £687m, slightly up on last year's figure of £632m.

A spokesperson for the Association of Investment Companies (AIC) said some shareholders do not believe it should be mandatory for directors to buy shares in the company they serve.

"The issue is subjective as, although having shares in their own company demonstrates directors and managers are aligned to the shareholder base, if the stake is sizeable it can raise questions as to whether they are achieving independence," said the AIC.