The board of Momentum Multi-Asset Value Trust has decided that the fund is too small to be viable and is proposing that it be liquidated and investors given the option of rolling into the manager’s equivalent open-ended fund.
Recent market challenges and share buy backs through the operation of the discount control mechanism have seen the company reduce in size, to net assets of around £43m, and its ongoing charges ratio increase. This has put the long-term viability of the company in question and the board has decided it is in the best interests of shareholders to liquidate the company and give shareholders the option to roll their investment into another investment vehicle or to receive a cash exit at close to NAV.
The board intends to put forward proposals to shareholders for the winding up of the company by way of a scheme of reconstruction pursuant to section 110 of the Insolvency Act 1986. Under the proposed terms of the scheme, shareholders will be offered the opportunity to roll over their investment into the VT Momentum Diversified Income Fund (MDIF), an open ended fund also managed by Momentum Global Investment Management Limited (MGIM), or to receive cash in respect of their investment in the company, or a combination of both.
The opportunity to roll over into MDIF will provide shareholders with the ability to maintain a consistent investment approach. MDIF has been managed by MGIM and its predecessors for over two decades, with the same valuation-driven philosophy as the company. MDIF has similar objectives to the company and there is a material overlap of portfolio holdings. MDIF aims to generate a high level of income with the prospect of maintaining the real value of capital over the long term, by investing in a multi-asset portfolio. It is larger than the company, with net assets of around £144m, and benefits from a lower ongoing charges ratio and a higher yield. It is proposed that a roll over into MDIF will be the default option of the scheme.
The discount control mechanism will be suspended for the time being.
The board will update shareholders on the progress of the proposal, including the key terms of the scheme, in due course.
[It is a shame to see this disappear but we understand the board’s rationale. It is a shame that there is no option to roll into a closed-end vehicle but at least investors have the option to take cash and buy another trust, probably at a discount, if they choose.]
MAVT : Momentum Multi Asset Value latest to fall on its sword