InvestmentsJun 10 2019

Martin Currie to convert Asia trust into fund

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Martin Currie to convert Asia trust into fund

The board of the underperforming Martin Currie Asia Unconstrained investment trust has decided to convert it to an open-ended fund.

The net asset value of the trust is £155.51m today (June 10), while its market capitalisation is £145.4m, meaning investors are profiting to the tune of about £10m, minus the cost of converting to an open ended fund.

The discount was 14 per cent on the day prior to the announcement that the trust would convert, which was June 4.

The trust has returned 69 per cent over the past five years, compared with 60 per cent for the sector average.

In a statement to the stock exchange, the board of the trust said: "The board of the company has conducted a review to assess the continuing commercial viability of the company and sees little prospect of any significant improvement in the key issues affecting the rating of the company's shares in the market.  

"As a result, the board has concluded that it is appropriate to take action in the best interests of all shareholders."

The trust's investment mandate changed to the Asia Long-Term Unconstrained strategy in August 2014, and has broadly met its investment objective since.

But despite this its shares have continually traded at a steep discount to their underlying net asset value, prompting the need to act.

The board concluded: "The discount, and the relative size of the company (as the smallest measured by net assets amongst the Association of Investment Companies' Asian peer groups), along with poor liquidity in its shares, continue to present structural hurdles that deter potential new buyers of the company's shares."