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magazineIPOs, closures and mergers in the funds space
New product launches, market departures and management changes are throwing up opportunities for fund investors to consider.
Fresh opportunities need to be scrutinised with care and altered mandates assessed to see whether they suit your financial needs and risk appetites.
Say hello
BB Healthcare Trust (BBH) has joined the stock market (2 Dec) after raising £150m. It should interest investors wanting to play the theme of rising healthcare demand amid an ageing population having to deal with more diseases.
It will use the money to invest in a concentrated portfolio of no more than 35 companies. Dividends are expected from mid-2017.
The product has been launched by Swiss healthcare specialist Bellevue Asset Management which runs the top-performing BB Biotech fund in Zurich.
It will focus on firms with a market cap of less than $10bn and will cover a broader range of sub-sectors and stocks outside the biotech sector.
It won’t invest in companies whose current profits are dependent on very high drug pricing. Furthermore, it says the fund will focus on investment ideas that it believes will deliver superior total returns over a three year-plus period – and not be distracted by shorter-term volatility.
Another familiar name
Waiting in the wings is The People’s Trust. Daniel Godfrey, the former chief executive of the Investment Association, has raised £110,853 at the time of writing through crowdfunding to launch the new, low-cost investment trust ahead of a listing in the first half of 2017.
The trust will be 100% owned by its customers. Retail investors have the opportunity to invest £20 to become a ‘founder’, or £10 if you’re under-35, and qualify for a discount on the share price when the fund launches.
Wave goodbye
Investment trust BH Macro (BHMG), a hedge fund which makes investments on the back of global economic analysis, could be leaving the stock market.
The fund is offering to buy back shares from its investors for 96% of the value of its net assets, a discount which reflects the costs of selling investments and winding up the fund.
If more than two thirds of investors accept the offer the fund will sell all its investments and return the money to shareholders.
Shares in the macro hedge fund have rallied by 9.4% since the start of November because it previously traded at a wider discount to its net assets than the level at which it is offering to buy back shares.
Trusts which have announced plans to wind themselves up sometimes provide decent returns.
Private equity investment trust Northern Investors (NRI) said in 2011 it would stop making new investments and return money to shareholders.
It has delivered the strongest return of any trust in the private equity sector over the past decade. Not far behind is fellow private equity trust Electra (ELTA) which was itself in wind-down between 1999 and 2006 before reversing course.
Private equity trusts take a long time to wind down because they own entire businesses which can sometimes be difficult to sell at a good price.
Heading for the door
Another shutting down is litigation finance provider Juridica (JIL:AIM) after a short and ill-fated spell on the stock market. Usually when an investment trust is set up investors have an opportunity to call for the winding up of the vehicle after a certain period of time if performance disappoints.
Elsewhere, M&G has announced it will wind up its M&G High Income Trust (MGHU) in March 2017. The default options for investors will be a switch into the open-ended M&G Extra Income (GB0031107021) fund run by the same manager, Richard Hughes. Those who prefer the closed-ended structure have JP Morgan Elect Trust (JPE) as their rollover option.
Third time lucky?
BlackRock Income Strategies Trust (BIST) is set to merge with Aberdeen UK Tracker Trust (AUKT) to form Aberdeen Diversified Income and Growth Trust.
The trust’s management deal with BlackRock will be terminated in January following 19 months of dire performance. And it is important to note that BlackRock was originally hired to revive the trust when it was a flop under the previous name of British Assets Trust run by F&C. Therefore Aberdeen’s plans will be the third version of the product.
Aberdeen will pursue a diversified multi-asset strategy with a change in investment objective to target returns of LIBOR+5.5% per annum (net of fees) over rolling five-year periods.
Dividends will be reduced, in recognition of a low yield environment, while the zero discount policy will be replaced with a more flexible approach.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
