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Investment Trust Insider on how to grow trusts

19
2018
July

Investment Trust Insider on how to grow trusts

James Carthew: imponderable questions in quest for scale

Last week I addressed the uphill battle Ashoka India Equity (AIE) faces if it wants to expand, having raised just £46.5 million in its flotation. It is by no means the smallest fund out there, however.

Many of the very smallest funds are in wind-up mode, with just a handful of assets they are in the process of selling. Nevertheless, setting these aside, I reckon that there are still about 38 funds with a smaller market value than Ashoka. These range from Chelverton Growth Trust (CGW) with a market capitalisation of just £3 million [up to] Aberdeen Frontier Markets (AFMC) at £47 million.

The main issues faced by small trusts are illiquidity, wide bid-offer spreads, high ongoing charge ratios and budget constraints when it comes to finding ways to attract new investors.

Illiquidity does put off most large wealth managers. Nick Greenwood, manager of Miton Global Opportunities (MIGO), made that point in his recent manager’s report. ‘The sheer size of funds now managed by a small number of houses makes it difficult for investment trusts to figure within these portfolios.’

Rathbones failed to buy Smith & Williamson but it is hoovering up Speirs & Jeffrey, which has big holdings in trusts such as Murray International (MYI), Temple Bar (TMPL), … read more here

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