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Investment Companies Roundup

Kindly sponsored by Baillie Gifford and Aberdeen Standard Investments

 Table of contents 

 New research

Here is a list of research we published over February:

An initiation note on Montanaro UK Smaller Companies Trust (MTU)

“Following the return of Charles Montanaro as manager in 2016, Montanaro UK Smaller Companies Trust (MTU) has rebuilt its long-term record of outperformance of its benchmark over the last three and a half years. Click here to read our initiation note.”

An annual overview note on Aberdeen Emerging Markets (AEMC)

“In our annual overview note on Aberdeen Emerging Markets (AEMC), we explore the driving forces behind strong performance in 2019 and how the fund has managed to deliver a much lower volatility of returns compared to its peers and its benchmark.”

An update note on Polar Capital Global Financials

“From launch to end December 2019, PCFT has delivered strong risk-adjusted returns, well ahead of UK-listed banks. As it moves to extend the life of the trust, the board has thought about how it can improve on the original structure and made a number of changes, including a five-yearly tender offer. We explore these themes in our latest note.”

An annual overview note on Aberdeen New Dawn

“Aberdeen New Dawn (ABD) provided peer-group beating performance during 2019 (an NAV total return of 18.4% versus a peer group average of 15.2%). Despite this, and also despite offering one of the lowest ongoing charges ratios amongst its peers, its discount remains peculiarly, one of the widest in the Asia Pacific sector.”

 In this issue

 Performance data

February’s biggest movers in NAV and price terms are shown in the charts below:

On the negative side:

On the positive side:

  • Paradoxically, China-specialists JPMorgan China Growth and Income and Fidelity China Special Situations had relatively good months;
  • Away from the melee, a handful of companies performed well. In healthcare and biotech, Syncona’s Freeline investment reported some promising trial results while recently launched RTW Venture had its second successive solid month; and
  • Elsewhere, the late-stage private company investor Schiehallion benefitted from some positive sentiment and Pershing Square’s concentrated portfolio of US equities had good months (though the market did not respond in kind).

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 Discounts and premiums

The table below shows the top five movers in either direction (more or less expensive relative to NAV):

wdt_ID Company 28 Feb (%) 31 Jan (%)
1 Syncona 23.10 7.50
2 Hadrian's Wall Secured -30.90 -38.70
3 Investment Company -4.30 -12.00
4 Chenavari Capital Solutions -22.40 -30.00
5 Bluefield Solar 15.30 8.10
6 Lindsell Train -8.70 13.30
7 Weiss Korea Opportunity -15.00 4.70
8 Standard Life Private Equity -23.90 -8.60
9 Gresham House Strategic -21.00 -6.00
10 Dunedin Enterprise -29.60 -15.60

More expensive relative to NAV:

  • Syncona is back to a premium above 20%. Over the past year the shares have not performed well for reasons that include the forced selling by former Woodford fund’s forced selling of Autolus (Syncona’s largest holding). Syncona is siting on a very large cash pile it can funnel to its existing portfolio and new life sciences investments;
  • Hadrian’s Wall Secured’s board recommended a managed wind-down while Chenavari Capital Solutions continues the process of realising its portfolio; and
  • Bluefield Solar’s shares led performance in the renewable energy sector, pushing up its premium back up. The company’s annual results were well received, allaying concerns arising from a broker report in January on the long-term outlook for power prices in the UK.

Cheaper relative to NAV:

  • Lindsell Train fell to a discount for the first time in 10 years. This is mainly thought to reflect idiosyncratic concerns regarding its stake in the business of its manager, Lindsell Train Limited, which accounts for about half of the trust’s assets;
  • Standard Life Private Equity’s and Dunedin Enterprise’s discount widening were share price led, reflecting wider views on private equity; and
  • We discussed Weiss Korea Opportunity in the ‘winners and losers’ section while Gresham House Strategic’s shares fell in line with the UK smaller companies sector, though the trust fared better in relative NAV terms. Poorer market sentiment may have reflected the private equity approach it adopts.

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 Money in and out

Fundraising highlights from the month:

Money coming in:

  • We welcomed Nippon Active Value, which got off the ground with a £103m launch (it was targeting £200m);
  • About £580m of net new money was raised, the bulk of which came from Sequoia Economic Infrastructure’s oversubscribed share issuance (it was targeting £250m). The issuance likely benefitted from the reversal in sentiment, attracting the flow of capital to an established yield-focused strategy;
  • Global Sustainable Farmland Income delayed its IPO due to the volatility in markets; and
  • Elsewhere, Bankers, Smithson and Personal Assets took advantage of their premium to NAV valuations to grow the funds.

Money going out:

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 Major news stories

Portfolio developments:

Corporate news:

Managers and fees:

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The following funds announced their full year dividends in February (please refer to the attached PDF document for a list of the notes around the numbers):

wdt_ID Fund Year ended Dividend (pence)* Change over year (%) Revenue / earnings (pence)* Cover
1 Aberdeen Emerging Markets 31 Oct 2019 21.00 Nil 2.40 0.11x
2 AVI Japan Opportunity 31 Dec 2019 0.90 N/A 1.40 1.56x
3 BB Healthcare 30 Nov 2019 4.40 15.7 0.00 Nil
4 Blackrock Energy And Resources Income 30 Nov 2019 4.00 Nil 4.00 1.00x
5 Blackrock North American Income 31 Oct 2019 8.00 Nil 6.00 0.75x
6 Blackrock Throgmorton 30 Nov 2019 10.20 2 8.60 0.84x
7 Blackrock World Mining 31 Dec 2019 22.00 22.2 22.40 1.02x
8 Brunner 30 Nov 2019 20.00 18.2 19.70 0.99x
9 Henderson Opportunities 31 Oct 2019 26.00 23.8 29.90 1.15x
10 Herald 31 Dec 2019 0.00 N/A 0.10 N/A

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Here is a selection of upcoming events:

Master Investor – the UKs largest private investor show – 28 March 2020


Our Independent Guide to quoted investment companies is an invaluable tool for anyone who wants to brush up on their knowledge of the investment companies’ sector.

 The legal bit

This note was prepared by Marten & Co (which is authorised and regulated by the Financial Conduct Authority).

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