The board of Abrdn’s Asia Dragon Trust (DGN) will launch a strategic review into the investment company’s performance, following its stubborn discount to NAV despite its recent merger with Abrdn New Dawn investment trust.
Stanhope Consulting has been appointed to assist with the review, while the board will also “consider proposals from established fund management groups” with experience of managing similar equity strategies. In an announcement published on the London Stock Exchange today (21 May), DGN’s board said any interested parties should contact Stanhope Consulting directly.
In July last year, DGN proposed a merger with the Abrdn New Dawn investment trust in order to improve liquidity, reduce management fees and lower ongoing charges. The deal completed in November 2023, yet the new larger trust still resides on a 9.9% discount to its NAV, according to AIC data.
On 7 May this year, the £34m Ashoka WhiteOak Emerging Markets Trust proposed a merger with DGN, which received support in principle from 56% of Asia Dragon’s shareholders.
Over three, five and 10 years, DGN has languished in the bottom quartile for its total return, having lost 16.1% over the last 36 months alone. It has, however, achieved top-quartile double-digit gains over one, three and six months, according to data from FE Fundinfo.
The board said it had always planned to closely monitor the performance of DGN following the merger, particularly in relation to understanding “the drivers behind relative performance of the company and actions being taken by the company’s investment manager, Abrdn Fund Managers, in light of such performance”. It also said in the trust’s prospectus that it would keep monitoring its discount.
DGN’s board stated this morning: “In connection with this exercise, and further to the company’s announcement on 7 May 2024, the board believes it is now appropriate to undertake a full strategic review of the future of the company, including the ongoing investment management arrangements.
“The board will be interested to consider proposals from established fund management groups with experience of managing equity strategies similar to that currently pursued by the company. Any such proposals will be considered alongside the current management arrangements.”
It added there is “no certainty that any changes will result” from the strategic review, while the board will make further announcements “in due course”.
