Investment trust insider on new issues – James Carthew: New Aberforth and Special Opportunities trusts are timely and good value
After a dearth of investment company flotations, we suddenly have two: UK small company trust Aberforth Geared Value and Income and real estate-focused Special Opportunities.
Share price discounts may still be way too wide but there are some signs of life in the investment companies market with two flotations on the blocks.
The first is a rollover vehicle for Aberforth Split Level Income Trust (ASIT). The new Aberforth Geared Value and Income Trust (AGVI) will be the fourth in a series of split capital trusts that follow the Aberforth value approach to investing in UK small and mid-cap companies.
In February, I wrote about the Edinburgh-based boutique’s biggest trust, Aberforth Smaller Companies (ASL). The three months that have elapsed since then have been great for the portfolio – ASL’s net asset value (NAV) is up by 14.2% over that period.
By virtue of the zero dividend preference shares (zeros) that make up part of its capital structure, stablemate ASIT should have been a geared play on this UK, value-style, small-cap recovery but it has lagged, returning 9.4% over the past three months. There is not a perfect overlap between the two portfolios, but they do have a number of large positions in common, so this is a bit odd but just comes down to stock selection and position sizing – ASIT has a more concentrated portfolio than ASL.
ASIT was launched as… read more here