FCA aware of Schroder trust valuation mistake

FCA aware of Schroder trust valuation mistake

The FCA is aware of the incorrect valuation of a holding in one of Schroders’ trusts, after an Amsterdam-based stock was overvalued for more than four months.

In a statement on Tuesday (September 20), the Schroder UK Public Private Trust, formerly the Woodford Patient Capital Trust, said it had overvalued its holding in BenevolentAI due to an administrative error.

FTAdviser understands that the regulator is looking into the valuation mistake as part of its normal process. 

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BenevolentAI floated on the Amsterdam Stock Exchange in April this year, and since then the value of the trust’s holding in the company has not been updated for the quoted price on a daily basis since April 26.

The company’s shares have, in fact, dropped by nearly 60 per cent in the period since the IPO.

The trust has now revised the value of the company’s shares on September 15 from 36p a share to 33.59p a share.

The trust has previously announced that its current alternative investment fund manager, Link Fund Solutions, will be replaced by Schroder Unit Trusts on October 1.

The FCA declined to comment.

The mistake comes at a turbulent time for the trust’s investors, which has undergone two changes in investment policy in as many years.

In the trust’s annual report, released in April this year, the board proposed to remove geographic restrictions to allow the portfolio manager to invest globally.

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

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.