Investment trust insider on the sector’s recent failures – James Carthew: Legal actions could follow trust management failings
People often quote Warren Buffet’s ‘Only when the tide goes out do you discover who’s been swimming naked’ when looking at the problems besetting the investment company sector, but most of the worst examples of failures recently have not been the consequence of higher interest rates, inflation or shifts in market sentiment, but of governance and management failures that could have happened at any time.
Progress, of a sort, has been made in the mess at ThomasLloyd Energy Impact (TLEI) with the loss of the continuation vote last week. That frees up the board to look at a wider range of options for the future of the closed-end fund. My hope is that someone can be found to take on the fund, perhaps after the problematic Indian assets have been carved out into a separate vehicle.
The independent investors backed the board’s call to reject continuation by 69:31 (the actual vote was 58:42 against continuation). My feeling is that shareholders were always likely to vote this way, even before the mudslinging started between the warring parties. I am left wondering whether there are grounds for any legal action against the fund manager Thomas Lloyd Group?
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