Schroders changes strategy of former Woodford trust

Schroders changes strategy of former Woodford trust

Neil Woodford’s former investment trust has changed its investment policy for the second time in two years, as the chairperson criticised the “frustrating” share price.

In its 94-page annual report, released this morning (April 21), the board of the Schroder UK Public Private Trust, previously the Woodford Patient Capital Trust, proposed to remove geographic restrictions to allow the portfolio manager to invest globally.

The changes that will be put to shareholders include no specific limits on exposure to any country or sector, and the trust is not structured on the basis of any country or sector weightings.

The trust’s policy is currently to invest “predominantly” in UK companies, both quoted and unquoted.

The board said this change would provide investors access to “great venture and growth companies”, and will be put to a vote on May 18 at the trust's annual general meeting.

This marks the second significant policy alteration in as many years, after the trust hit out at Woodford’s investment style in 2020.

In May of that year Susan Searle, former chairperson of the trust, said Schroders’ attempts to improve the diversification and liquidity of the trust were hampered by its policy that required the manager to have a minimum of 40 holdings and ensure no more than 80 per cent of the company’s assets were held in unquoted holdings. 

Shareholders subsequently approved proposed changes to the policy, including lowering the minimum holdings to 30.

Searle retired from the board in June last year, and was replaced by Tim Edwards.

The trust’s performance has lagged the growth sector since mid-2019, and its share price is currently 70 per cent lower than its peak in May of that year.

Schroders took over the trust in April 2020, and since then its share price has risen 6 per cent.

However, as at December 31 last year, the share price sat at a 31 per cent discount to net asset value.

In the annual report, Edwards criticised the trust’s share price.

He said Schroders had made significant progress in rebalancing the portfolio during the year, with several new private investments being completed, including in Revolut, Ada Health and technology firm Tessian.

“Frustratingly, this progress has not yet been reflected in the company's share price,” he said.

“The board continues to review various initiatives to improve this situation including the possible use of share buy-backs.”