The £125.7m trust is currently trading at a 4.7% discount, but investors will vote in June on whether the board should go ahead with a tender offer, allowing an exit at NAV. The trust is managed by Sam Vecht (pictured) and Chris Colunga and has returned investors 49.5% over three years, according to the Association of Investment Companies (AIC).
Directors are recommending all investors support the proposal, but none of the board will be redeeming their shares.
The board stated in the regulatory filing: “Although the region has now made up part of the ground lost against developed markets over the last decade, there still remains considerable potential for growth.
“Further, company valuations are approximately half those of their western peers, dividend yields are higher, supported by strong free cash flow.”
AIC communications director Annabel Brodie-Smith said tender offers are not unusual for investment trusts, noting there were 25 such offers in 2017.
Russia view
In April, Vecht told Portfolio Adviser he had not made changes to his Russian allocation as its currency dropped and markets sold off in response to US sanctions.
At the time, Russia was the trust’s largest holding and a slight overweight at 55.1%. Today its allocation is 54.4%, according to FE data.
The tender offer proposal will be put to a shareholder vote on 20 June.
It would require 75% approval to pass and the board has the ability to withdraw the tender offer if take up means the investment trust would end up with less than £75m in assets.
