Christian Mayes, Portfolio Adviser, 12 Nov 2025:
The £1.6bn Smithson investment trust has announced plans to roll into an open-ended structure to permanently close its “entrenched” discount.
The proposal follows engagement with Saba Capital, which holds a 16.05% stake in the investment trust.
If approved, assets will be transferred to Smithson Equity fund, an OEIC in the process of being established.
Shareholders will also be offered the option of a full cash exit.
In a stock exchange announcement, the board said attempts to reduce the discount through its significant buyback programme, which saw the trust deploy £992m to repurchase 69.6 million shares since 2022, had proved unsuccessful..
The new fund will charge 0.9%, matching the management fee of Smithson. However, this will be based on NAV, rather than market capitalisation.
James Carthew, head of investment company research at QuotedData, said: “We are always sorry to see money flow out of the sector but there wasn’t much point in Smithson being an investment company. No gearing, no private investments, a focus on ‘small caps’ but the median £8bn market capitalisation would put most of the portfolio firmly into the FTSE 100 if it was listed in London.
“There were no derivatives, nothing creative with income generation or distribution, making this a pretty plain vanilla vehicle. Shareholders will lose by no longer having a board fighting in their corner. They’ll also suffer roughly 10% higher management charges as the fee will be based on NAV rather than market capitalisation, but otherwise things will stay the same.”
Read more here