Investment trust insider on a shrinking sector – James Carthew: We might regret what’s lost in the trust bloodbath
Four more investment companies – Aquila European Renewables, Ecofin US Renewables, Gulf Investment Fund and Keystone Positive Change – are heading for the exit.
The bloodbath in the investment companies sector seems to be getting worse. Last week I listed four funds that had recently announced that they were headed for the exit. Since then there have been another four – Aquila European Renewables (AERI), Ecofin US Renewables (RNEW), Gulf Investment Fund (GIF), and Keystone Positive Change (KPC).
The investment companies sector thrives on change. The structure makes it easier to put underperforming funds out of their misery and improve the lot of shareholders. Often, change stops the rot and gives a fund a new lease of life. Unfortunately, in Keystone’s case the opposite happened.
Back in 2020, the UK equity trust was being run with a value approach and, as we know, value had struggled relative to growth since the global financial crisis in 2008. The board had also identified that UK equites were falling out of favour and felt that the best option was to adopt a new mandate that was more in vogue. The shift to a global, more ESG-friendly approach under Baillie Gifford ticked all the boxes in that regard. The initial response was very positive and KPC’s shares moved to trade around asset value for most of 2021.
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