Investment Trusts  

Shareholders vote to prolong life of poor-performing UK trust

Shareholders vote to prolong life of poor-performing UK trust

Shareholders in the Strategic Equity Capital trust have voted to keep the trust going in a general meeting held today (March 30).

Earlier this month, two shareholders called for the Strategic Equity Capital trust, which has managed by Gresham House's Ken Wotton since last September, to be shut down over its long-term track record and its large discount.

The trust traded at a discount of 15 per cent at the time. It had returned 33.6 per cent over the past five years while its sector, the AIC UK Smaller Companies, returned 75 per cent.

Ian Armitage and Jonathan Morgan, who collectively own 7.66 per cent of the trust, called for a general meeting to take a vote on the matter.

In an open letter, Armitage and Morgan said Strategic Equity Capital had consistently traded at a discount to net assets of greater than 10 per cent for over five years and that this was unlikely to narrow.

They criticised the board for sanctioning multiple changes to the investment management team, resulting in the abandonment of the long-standing and proven investment strategy, and for dropping the discount target and discount control mechanism.

Shareholders were today asked to vote on whether the £166m trust, which has broadly performed in line with its sector since Wotton took over, should continue to exist.

A total of 47,222,046 votes were cast with 8,417,501 against keeping the trust open and 38,804,545 for keeping it open. A further 1,807,022 votes were withheld.

Richard Hills, chairman of Strategic Equity Capital, said: “We are grateful for the support of a significant majority of shareholders for the continuation of the company. 

“The company’s net asset value has risen 33 per cent since Ken Wotton was appointed as lead fund manager in September and the company’s share price is at an all-time high. 

“Nevertheless, the board acknowledges shareholders’ frustration that the discount to net asset value remains wide and we will be looking at ways to address this. We will update the market in due course.”

Following the first vote, shareholders were asked to vote on whether they should be able to realise their investment in the trust for cash at close to net asset value or exchange their shares for those in another investment vehicle.

The board urged shareholders to vote for the trust to continue and against the second resolution earlier this month.

Shareholders voted against this second resolution.

Ruth Gillbe is a freelance reporter for FTAdviser