The £177m Brown Advisory US Smaller Companies trust has initiated a strategic review of its future, according to an update published on the London Stock Exchange today (8 July).
In a statement, the board said: “The board continues to have confidence in the portfolio manager’s philosophy and process, and in their ability to deliver positive results over the long term, as demonstrated historically.
“However, the board also recognises that more recent performance, despite delivering strong returns in absolute terms over the last year, has lagged the company’s benchmark by a significant margin.”
Over the past five and 10 years, the trust has been a bottom-quartile performer in the IT North American Smaller Companies sector, based on data from FE fundinfo. While it has been in the top quartile over the past one and three years, it has still trailed the Russell 2000 index it is benchmarked against, as demonstrated below. In share price terms, the trust is trading on a 7.2% discount to its net asset value, according to AIC data.
In the past 18 months, the board has attempted to deliver better value to shareholders by reducing management fees and increasing share buybacks
While the feedback from shareholders has been “broadly supportive” according to the RNS, several shareholders have indicated a preference for short-term liquidity.
“Against this backdrop, the board is considering a range of strategic options, including the provision of a significant cash exit opportunity for shareholders.”
The board said it will provide further updates in due course, given the continuation vote planned at the annual general meeting this year.
See also: Brown Advisory launches UCITS version of long-running US strategy
