Acorn Income (AIF) has concluded its strategic review and, having received strong interest from a number of managers, has proposed to recommend the appointment of BMO Global Asset Management (BMO) as its manager, and the adoption of a new investment objective and policy. The strategic review had been announced on 21 April, and you can access our news story by clicking here.
Proposed name change to BMO Global Sustainable Equity Income Fund
The portfolio will be managed by Sacha El Khoury, with Nick Henderson as the named alternative. Both are members of BMO’s responsible global equities team. AIF’s board has proposed to change the name of the company to BMO Global Sustainable Equity Income Fund. The change of name is expected to become effective around the time of BMO’s appointment. Shareholders will be asked to approve the proposed name change, which would also be conditional on the proposed investment objective and policy being approved by shareholders.
AIF notes in this morning’s announcement that “using its Sustainable Global Equity Income investment strategy, BMO will manage AIF by investing principally in a global portfolio of publicly listed companies that offer an attractive level of income and make a positive impact on society and the environment.
The strategy will seek a balance between growth and income by taking advantage of one of the most exciting and fastest-growing investment opportunities in the market today: investing in companies that are expected to benefit commercially by proactively addressing long-term sustainability issues. Importantly, the proposals will also set the company’s revenue and dividends on a more sustainable path.”
The proposals are subject to shareholder and regulatory approvals. A circular with further details of the proposals, including a notice convening the extraordinary and annual general meetings, both to be held in August 2021, is expected to be published in July 2021.
‘Initial portfolio yield to be circa 3.5%’
AIF’s board believes the changes proposed are in the best interests of shareholders. The board listed the following benefits in the announcement this morning:
- Making a positive environmental and societal impact: The company’s proposed investment strategy will target publicly listed companies globally, whose products and services contribute directly to addressing sustainability challenges such as climate change and ageing populations, and as a result make a positive impact on the environment and society. The board believes this strategy is increasingly relevant to a very wide range of investors as well as providing the potential for strong long-term growth.
- Attractive return profile: The strategy will offer an attractive risk/reward profile for the yield seeker with a balanced approach between growth and income. The initial portfolio yield is expected to be circa 3.5%.
- Aligns investment with values: The strategy will be ideal for individuals wanting to align their investments to their values, while still benefiting from an attractive level of income and potential for long term capital growth.
- Reduced management fees and fixed costs: The management fee will fall from 0.7% on the gross assets of the company to 0.65% on the net assets of the company and the performance fee is removed entirely. Other operational cost savings are expected, including no additional fees associated with investment research or AIFM services. Furthermore, BMO’s management fee will be waived for the first six months of appointment.
- BMO’s leading ESG and investment trust track record: BMO Global Asset Management is recognised as one of the original pioneers, and has one of the longest track records, in responsible investing. Combining this with its experience managing a range of investment trusts, across different geographic mandates and asset classes, sets it apart from its peers.
- Engaging companies to improve is a key pillar of BMO’s sustainable philosophy: Investing sustainably is no longer about looking at Environmental, Social and Governance factors from the single prism of managing risks, and limiting the downside, but about also driving the upside. The sustainability risks and challenges the world faces ultimately underpin significant long-term growth opportunities for those companies addressing them.
- Change of Investment Objective and Policy and Discontinuation vote: In the upcoming general meetings, shareholders will have the opportunity to vote on resolutions for the change of investment objective and policy and for discontinuation of the company. The board intends to recommend shareholders vote in favour of the change of investment objective and policy and against the discontinuation vote.
AIF: Acorn Income set to appoint BMO following strategic review