Middlefield Canadian Income (MCT) will start its new life as an actively managed exchange-traded fund (ETF) with just over £75m, it was confirmed today.
The £150m investment trust said 52.7% of its shares would roll over into the ETF that will start trading on Thursday with the remainder receiving cash as they exit.
Middlefield was forced to propose converting into an open-ended fund in May as part of a settlement with Saba Capital, the activist hedge fund that built up a 29% stake and is likely to have cashed out.
Ahead of the reconstruction, MCT shares have rallied to trade at close to net asset value having stood at double-digit discounts before Saba’s appearance on the shareholder register.
While converting a closed-end investment company to an open-ended fund is a tried and tested way of closing a wide discount, it is the first time a London listed fund has become an active ETF.
Although Middlefield Canadian is now small and below the radar of institutional investors, its Toronto-based fund managers Dean Orrico and Rob Lauzon will hope to attract investors looking for diversification from the US stock market as well as a 4% dividend yield.
Our view
James Carthew, head of investment company research at QuotedData, said: “So the new Middlefield Canadian Income active ETF will start life with assets of about £79m. That’s not bad, but we are fascinated to see how things go from here. Many are predicting great things for active ETFs and we are going to be covering them in more detail over time.”
