Apax Global Alpha launches €30m share buyback as part of newly created distribution pool

In a stock exchange notice on Wednesday (27 June), the board said it had updated the trust’s capital allocation policy to create a distribution pool, which earmarks balance sheet funds for share buybacks.  APAX said 100% of the ‘excess cash flow’ will be allocated to the pool, defined as private equity distributions, and cash income from the debt portfolio, less capital calls paid, costs and expenses, repayment of the RCF, and dividends paid.  This allocation will continue until the pool reaches 5% of the net asset value. To launch an immediate share buyback, the pool will be initiall…

Close Brothers AM CIO Robert Alster and head of bespoke Giles Marshall depart in restructure

As CIO, Alster was responsible for the wider central investments and funds teams, having joined the firm in 2014 as head of research. He will be succeeded by CBAM’s head of wealth planning John Edmeads. Marshall joined CBAM in 2007 as an investment director and was later promoted to COO for investments, eventually becoming head of bespoke in 2019. Close Brothers AM restructures senior investment leadership He will be replaced by CEO Eddy Reynolds, who will receive support from CBAM’s chief commercial officer Nathanael Pinder. Pinder, in turn, will be taking a position on the execut…

FCA pressed to block Shein’s London IPO over labour practices

Shein has been reportedly looking to IPO in London, after a failed attempt to list in New York earlier this year. Raspberry Pi confirms London listing In the letter, sent on behalf of UK charity Stop Uyghur Genocide, Leigh Day argued that concerns over the company’s labour practices in its supply chains, among others, ultimately led to the refusal from the US Securities and Exchange Commission to allow Shein to IPO in New York. “The UK is a signatory to various International Labour Organisation conventions,” the letter stated. “Our client is concerned that listing a company on the …

‘The most logical move’: Alliance Witan shareholders poised to benefit from better liquidity and lower costs

Both trusts joined this year’s investment trust M&A drive today (26 June) with news of the formation of Alliance Witan, a £5bn vehicle that will likely be catapulted into the FTSE 100 to join the likes of Scottish Mortgage and F&C investment trust. The blockbuster merger, described by Stifel analysts as “the most logical move”, comes as a result of Witan CEO Andrew Bell’s retirement, which prompted an invitation for proposals from interested parties for the future management of its portfolio. “While not an unexpected move following the retirement of Witan CEO Andrew Bell, this announc…

Morningstar downgrades six BlackRock funds over triple manager departure

Morningstar said the departures had an impact on the Morningstar Medalist Rating of the funds Krautzberger, Mondelaers and Allen were managing. The BlackRock vehicles targeted by the downgrade were the Sustainable Fixed Income Strategies, Sustainable Euro Corporate Bond, Sustainable Euro Bond, Euro Short Duration Bond, Euro Corporate Bond and Euro Bond funds. Krautzberger was head of the EMEA fundamental fixed income team and managed four of BlackRock’s funds affected by the downgrade – the Euro Bond, Sustainable Euro Bond, Euro Short Duration Bond and the Sustainable Fixed Income Str…

Investment Week reveals finalists for Sustainable Investment Awards 2024

Now in their 18th year, these awards are intended to honour fund providers, research & ratings teams, wealth managers, fund selectors, service providers, consultancies and individuals who have a key part to play in the evolution of sustainable investing.  We will celebrate the winners of the Sustainable Investment Awards at a special ceremony in London on 19 September, which will provided a great opportunity to network with contacts across the sustainable investment sector.  Judging Groups and individuals were only considered if they submitted an entry for these awards. The e…

Marks & Clerk’s Michael Shaw: Brand reputation in the age of finfluencers and navigating FCA regulations

The concept, referring to individuals who establish their credibility on social media through personal reviews of products and services and usually focusing on a niche area, first emerged in the early 2000s. However, the diversification and surge in popularity of social media platforms throughout the last decade has seen the concept skyrocket – and with this meteoric rise, regulators have sometimes struggled to keep pace. ‘Finfluencers’ face FCA legal action over trading scheme With influencers now occupying new avenues of consumer product marketing such as financial services, wher…

Alliance Trust and Witan Deal Will be First of Many

Alliance Trust (ATST) and Witan Investment Trust (WTAN) have agreed to merge, in what is the largest deal to date within the investment trust sector.

There have been a number of investment trust mergers in recent years, including the tie up of Troy Income & Growth Trust (TIGT) and STS Global Income & Growth Trust, which took effect in March 2024. One might expect the trend to continue.

Closed-ended investment companies can represent an attractive investment vehicle for investors. They comprise long-term capital, meaning that, in theory, they do not face the same liquidity constraints as their open-ended peers. This permits a broader investment universe and some more specialist investment strategies.

In addition, trusts can gear up which can accentuate returns (and losses). Despite this, many have proven unpopular in recent years. Discounts to NAV have generally widened.

Why Investment Trust Discounts Won’t Disappear

Indeed, the number of investment trusts trading at a discount has increased, and they have been impacted by a number of unwelcome developments.

Of the 207 investment trusts over £100m on Morningstar Direct, just seven traded at a premium to NAV at end May 2024, including the giant closed-end investment company 3i (III). The average discount among this group was a whopping -13.8% to NAV. This makes for poor reading in the industry.

Discounts to NAV have long been studied by academics, who dub this the “closed-end fund puzzle.” It is well known that closed-end funds typically trade a discount to the sum of their holdings. The efficient pricing of their shares is impacted by liquidity and sentiment towards a strategy (i.e. expectations of future performance), but some argue the market fully discounts the impact of fund costs, which they say are fully baked into the price. Indeed, costs are paid from by from NAV.

This latter point is important. Under “PRIIPS” fee disclosure rules, representative fee figures include the cost of debt and other operational costs, and treat all investment trusts the same way as the hedge fund industry. More fee transparency is a good thing, but critics of the regulation say that these costs were already reflected in discounts to NAV: costs are being double-counted.

That is open to debate. Still, the claim will become more germane as the costs of gearing may be expected to go up as trusts roll over their debentures and other forms of debt at higher interest rates.

The General

Alliance Trust and Witan in £5 Billion Merger

Two of the UK’s most popular closed-ended investment vehicles, Alliance Trust (ATST) and Witan Investment Trust (WTAN), are to merge to create a £5 billion multi-manager investment vehicle.

The deal, which will create a new trust called “Alliance Witan”, follows a strategic review triggered by the retirement of Witan chief executive Andrew Bell.

Under the terms of the arrangement, Witan will undertake a scheme of reconstruction to roll into Alliance Trust, which has a market value of £3.42 billion. That will come in exchange for the issue of new Alliance Witan shares to existing Witan shareholders.

The newly merged trust will create a rival to FTSE 100 listed F&C Investment Trust (FCIT), which has a current market value of £5.13 billion, and a Morningstar Medalist Rating of Bronze.

Alliance Trust is one of the UK’s most visible investment trusts, and beat its benchmark, the MSCI All Country World Index, in the last financial year. It is currently trading at a -5.64% discount, which means the shares are trading below the net asset value.

The smaller of the two trusts, Witan has a market capitalisation of £1.64 billion and is trading at a -7.83% discount to NAV. Shares in Witan rose nearly 4% on Wednesday morning to 271p.

The “multi-manager” approach used by both trusts is set to continue.

“Since Andrew Bell announced his decision to retire, we have been through an extensive process to identify the best candidate to take on the management of our shareholders’ assets,” Witan chairman Andrew Ross said today.

“The board assessed a number of very strong proposals, including single-manager candidates with impressive track records. However, the Board was unanimous in recommending the combination with Alliance Trust, which allows the continuation of our multi-manager approach at lower fees and in a larger, more liquid, vehicle.”

Witan/Alliance Trust Portfolios Are Different

Alliance Trust and Witan Investment Trust have both previously used multi-manager strategies. Alliance Trust has used Willis Towers Watson as an investment manager, while Witan has a panel of six outsourced investment managers – including both Lindsell Train and Artemis.

Following the merger, Willis Towers Watson will have “overall responsibility” for managing the assets of the combined trust, whose investments will be selected according to a 10-20 “best ideas” approach.

Despite the similar approach, both trusts’ portfolios look distinctly different. Alliance Trust’s top three holdings include “Magnificent Seven” constituents Alphabet (GOOGL), Microsoft (MSFT) and Amazon (AMZN), with

River Global head of UK wholesale Simon Smith exits

Smith joined the firm from Merian Global Investors in 2020, arriving at then River and Mercantile prior to the completion of Jupiter Asset Management’s acquisition of Merian. He served as head of UK wholesale distribution for two years at Merian, and held the same role for almost a decade at Old Mutual Global Investors, prior to which he worked at abrdn, joining Standard Life Investments in 1999. River Global taps Royal London AM and Vanguard for sales hires He joined the firm as head of UK discretionary sales, a role he held for ten years, before taking on his first head of UK who…