Henderson’s Ian Barrass has gone on the offensive ahead of a shareholder vote to potentially shut his Value Trust, saying his turnaround job is only half done.
Henderson gained control of the trust from rival fund management group SVM Asset Management in February last year, but has so far failed to turn around a dismal track record.
“The key message is we are really halfway through the portfolio restructuring; we need until about April 2016,” said Mr Barrass.
“You can’t rush the process in this market. I don’t apologise for doing this in a measured, careful way.”
The manager said he had sold out of legacy holdings such as Cambium Global Timberland, which invests in forestry, and had put the money into Northern Investors Company, which is a listed private equity fund.
In general, Mr Barrass said he had been favouring funds that invest in the distressed debt market. Among his top-10 holdings is the NB Distressed Debt Investment Fund, an investment trust that makes up 3.9 per cent of his portfolio.
The manager said roughly 15 per cent of the portfolio was made up of investments in illiquid funds – inherited from SVM – and he expected to get cash back from them in less than two years’ time.
The trust has delivered just 1 per cent since Henderson took control on April 1 last year, well shy of the 20.8 per cent rise of its benchmark FTSE World index, according to data from FE Analytics.
This has put pressure on the trust’s management, which faces a continuation vote this week (December 19) where shareholders will decide whether to let the trust continue or close.
Deciding to shut the trust and sell its assets could be beneficial for investors if the trust’s shares are trading at a deep discount compared to the trust’s net asset value.
This is the case with the Henderson trust, whose shares were on a 12.6 per cent discount on December 9, according to data from the Association of Investment Companies.
Elsewhere, the trust’s chairman Shane Ross resigned last month after a disagreement ahead of its annual general meeting. Mr Ross was already scheduled to step down in December, so the departure meant his replacement, Richard Gubbins, took on the role early.
Still, the board of the trust has rewarded its investors for their patience in the past 18 months. It has proposed to double the trust’s dividend for 2014 to 3p per share, compared to last year’s 1.5p per share.
