The concept of investment trust features in an Oeic is unique in the retail open-ended universe, although Simon Elliott, head of investment trust research at Winterflood Securities (Wins) notes it has been done before for family offices.
The portfolio, initially to be used as a roll-over for the global growth Electric & General (E&G) investment trust, will launch in August and will retain the E&G name, which dates back to the trust’s launch in 1890.
E&G in its current form is managed by Taube Hodson Stonex Partners (THS) and the group is to continue in this capacity when the fund re-launches in its Oeic structure. However, the authorised corporate director (ACD) of the Oeic will be Carvetian Capital Management, which means THS will not own the fund and can be replaced as its manager.
In keeping THS as the existing manager, the Oeic is to benefit from a lower negotiated management fee of just 30 basis points on top of a performance fee structure. As a result, the TER of the Oeic is expected to be lower than that of the investment trust, which is 0.61% at present, Elliott says.
The trust’s existing directors, including Jonathan Ruffer, John Pocock and Gerry Aherne, are to carry on their existing roles for the Oeic.
The continuation of the existing manager and directors as well as the adaption of an IT structure within an Oeic has lead to some questions over the proposals. Elliott notes many shareholders are disappointed E&G has not offered another global investment trust a roll-over option alongside the Oeic and cash choices.
E&G has assets of around £320m but due to its long history has a substantial list of retail shareholders. A vote on the proposals is slated for early August and despite criticisms, it is expected to be approved.
