Results for the year ended 31 October 2013 show EWI had a great 2012/13 – delivering a 35.6% increase in NAV and 44.4% increase in share price as compared to a 21% increase in the MSCI All Countries World Index.
EWI’s Board is concerned about its discount. It has decided to change the investment policy. Currently EWI invests via a focused global portfolio, the Board explain that this strategy was unusual when EWI adopted it in 2003 but has now become more mainstream. QD comment: this is indeed the case – for many years most global funds operated with distinct geographic pools of money – a US portfolio, a European portfolio etc. – now this approach is becoming rarer. Alliance Trust : ATST was one of the most recent funds to adopt the global portfolio approach. The Board believes EWI needs to differentiate itself again and proposes that EWI now adopts a policy of investing in smaller (sub $5bn market cap.), less mature companies and allowing the portfolio to become less concentrated than today. To facilitate this, while management of the fund would remain at Baillie Gifford, Mark Urquhart, EWI’s current manager, would be replaced by a two man team of Douglas Brodie (lead) and John MacDougall (deputy). Shareholders get to vote on the proposed changes.
QD comment: While $5bn might sound like quite a decent size, adopting this as an upper limit for market cap. of new investments for the fund does shift EWI’s bias towards the Global Smaller Companies arena. There is one other Global Smaller Companies fund in existence, F&C Global Smaller : FCS, which currently trades at a premium and has been issuing new shares – no doubt EWI’s Board hope to replicate this. Changing EWI’s mandate in this way also helps to further differentiate the fund from Baillie Gifford’s other global trusts (Scottish Mortgage : SMT, Monks : MNKS and Mid Wynd : MWY) and goes some way to silencing calls for mergers amongst this group of funds. Shareholders in EWI must now decide whether they want to stick with the fund or switch to another large cap. global growth fund.