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Spate of contrarian investment trust IPOs

Spate of contrarian investment trust IPOs after coronavirus drought stuns investors

By Jessica Tasman-Jones, 30 Sep 20

Half of the total £900m being targeted is in out-of-favour UK equities

A spate of investment trust IPOs after a six-month drought induced by the coronavirus outbreak and lockdown has surprised investors due to the dominance of products in the UK equities space, when launches typically take place when a sector is running hot.

Last week, Tellworth British Recovery & Growth published its prospectus for a UK multi-cap portfolio to be managed by Paul Marriage, John Warren and Johnnie Smith, while Sanford Deland announced its intention to float the Buffettology Smaller Companies investment trust as did Schroders with the Schroder British Recovery trust, which would invest in public and private UK companies…

The Triple Point Energy Efficiency Infrastructure investment trust and Home Reit, which aims to provide accommodation for people who have been homeless, are the two other investment trusts that are currently in the midst of investor roadshows..

“The really unusual thing here is that you’ve got three launches in a sector that’s the complete opposite of hot,” says Premier Miton fund manager Nick Greenwood, who runs the Miton Global Opportunities investment trust, which takes a special situations approach to closed-ended funds…

Carthew is more pessimistic. “Our guess is that not all of these UK funds are going to get away. Tellworth’s head start and its commitment to keep the discount tighter than 5% might make all the difference.”

QuotedData head of investment trusts James Carthew says IPO activity typically picks up in September after the summer holidays. “As the summer wore on and hopes that the worst of Covid were behind us grew, the dust was blown off a few of the prospectuses that the advisers had been working on earlier in the year,” Carthew says, noting the pandemic stopped several planned investment trusts going to IPO in Q1 2020.

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