Free Pay Off by Stephen Leather Page B

their investments, but even bigger fortunes were made by the men who managed the funds. That's still the case.
    Take a gold sovereign and place it over a small scale map of Edinburgh centred on Charlotte Square, and you're probably covering more millionaires per square foot than anywhere outside the City of London. Many of them are fund managers, men who make their money by looking after other people's.
    These days most of the Ivory & Simes and Martin Curries have branched out into other lucrative areas like pension fund management, but my father had always stuck to what he knew best, looking after an investment trust that was his pride and joy. He'd managed Scottish Commercial Overseas Trust, SCOT as it was called, since he was a young man fresh out of St Andrews University with a first in economics.
    My grandfather got him the job by pulling a few well 68 greased strings. My family's always been like that: doors are opened and more strings pulled than at a campanologists' convention to make sure the next generation gets a head start on their peers. Don't knock it until you've bene- fited from it.
    Father took to it like a duck to water, long expenseaccount lunches, meeting old friends from school and university, drinks with the G and T brigade, and free publicity in the quality Scottish press. All he had to do was to keep up with the FT Index, and he had the experience of a flock of Scottish stockbrokers' analysts to draw on. OK, I'm making it sound easy, but running an investment trust is a darn sight more fun than breaking rocks for a living.
    It's just a matter of running with the pack, switching into sectors as they become popular and ditching them when sentiment goes against them. Japan this year, America next, making sure you sell at a profit wherever possible but never being afraid to cut loose a dead loss.
    The really good guys, the ones that earn �100.000 a year and more, set trends rather than follow them. They know, based on instinct or research, where to invest and where to sell, but everyone knows who to watch and the sheep follow the wolves and everyone makes a good living, my father included.
    For the whole of his working life my father ran the SCOT investment trust with John Read, another St Andrews graduate. But when Read died of a massive stroke two years ago my old man was left in sole charge, and the mantle didn't fit too well on his shoulders.
    He should have taken on more staff right away, beefed up the research side, maybe even taken on a few more non- executive directors, but at fifty-nine years old it was the first time he'd had his hands on the reins and he was reluctant to give them up.
    By then SCOT was doing fairly well, with investments worth a total of fifty-two million, though its performance 69 lagged well behind the high-flyers. In fact SCOT had underperformed the investment trust sector average for the past five years but it had still done better than many. It was just after Read's death that Ronnie Laing, drugs dealer, and Alan Kyle, property developer and self-styled City tycoon, crawled out of the woodwork.
    There's another big difference between unit trusts and investment trusts. A unit trust is an open fund, the more money that comes in the more units are created. If investors withdraw their money then the number of units is reduced.
    An investment trust is different, it's a closed fund, set up with a limited number of shares. The only way to increase the share capital is to issue more shares, which sometimes happens. You buy them through a stockbroker and it's the City that sets the price. A share that's in vogue or is doing particularly well will have more money chasing it than a dullard, and its price will rise.
    Now, the fact that investment trust shares are sold on the stock market leads to an interesting phenomenon called the discount. The price you pay for a share is more often than not less than the actual value of its investments.
    Say a fund's investments are worth a