With UKT holding just £49m in net assets, it is widely deemed subscale and last week the board decided it was unable to continue “in its current form”.
The merging of investment companies is generally seen as problematic as it is “unusual” for both boards to agree terms, as well as the cost implications on both sides.
Annabel Brodie-Smith says this merger – which experts expect will gain approval at the June general meeting – should demonstrate to the industry that mergers should, can and do happen with success.
Ewan Lovett-Turner, director of investment companies research at Numis says there seems to be a trend emerging for trusts to assess whether or not their mandates are working.
Also last week Keystone Investment Trust, offered by Invesco, announced that portfolio manager Mark Barnett would be passing the reins to James Goldstone from 1 April.
Keystone chairman Beatrice Hollond describes how 14 years ago, the board decided to “appoint a talented young fund manager called Mark Barnett”.
Thanking Barnett for his “superior long-term returns for shareholders”, she says the time is now right – given his significantly greater responsibilities since Neil Woodford left the group – to “pass the baton to one of the rising stars of his team”.
“It’s important that they’re trying to differentiate the fund,” says Lovett-Turner.
He adds that continuation votes – where shareholders can vote in favour of winding up the company and often seen as a last resort – are something of a warning sign, such as that on the cards for Henderson Alternative Strategies, scheduled for early 2018 following a persistently high discount to NAV, despite it having narrowed slightly during 2016 from 19.8% to 19.3%.
Lovett-Turner says the trust has had relatively weak performance and while time is on its side, it has “a lot to do to prove itself ahead of that vote.”
Size isn’t always the issue, however.
