Trust news: former Woodford Patient Capital and more

This month’s investment trust roundup covers Neil Woodford’s former trust, a broker’s view on the private equity favourite HgCapital, developments at Nick Train’s Finsbury Growth & Income and more.

Former Woodford Patient Capital faces the end

The Schroders Capital Global Innovation Trust, formerly known as the Woodford Patient Capital Trust and then as the Schroder UK Public Private Trust, looks likely to be wound up after the board brought forward a continuation vote at which shareholders will decide its future. Brokers said the most likely outcome was a sale of assets and a winding up of the fund.

The trust was launched by the former star fund manager Neil Woodford after he quit an illustrious career at Invesco Perpetual, as it was then known, to start his own firm. After that business, Woodford Investment Management, was engulfed in crisis in 2019 over the failure of its flagship fund, Woodford Equity Income, management of the trust was transferred to Schroders the following year. Attempts to revive its fortunes, however, have not borne fruit and the trust’s net asset value languishes at about 20p, compared with just under 100p when it was floated, while the share price is just 10.5p even after a jump of more than 7% on Wednesday, when the continuation vote was announced.

The board said: ‘The company has committed to hold a continuation vote at its 2025 annual general meeting, which is currently scheduled for May 2025. The board has determined, following a shareholder consultation exercise, to bring forward the continuation vote in order to provide clarity on the future of the company at the earliest opportunity … If the continuation vote does not pass, it is proposed that the company will enter into managed wind-down with any cash proceeds from realisations being returned to shareholders over time.

‘Any managed wind-down will reflect the illiquid nature of the portfolio, with realisations being made at an appropriate time in the life cycle of each investment in order to maximise returns for shareholders. It is expected that a circular will be posted to shareholders in January 2025, containing further details of the continuation vote and the nature of any managed wind down, should the continuation vote not pass.’

The trust said it would make no further new investments pending the outcome of the continuation vote, although further investment in existing holdings would be permitted, subject to board approval.

City analysts predicted that shareholders would vote against continuation. Panmure Liberum, the broker, said: ‘Given the consultation that has taken place, the composition of the [shareholder] register [which includes ‘activist’ investors], the size of the company, and the 50%-plus discount, it seems very likely to us that [the trust] will go into managed wind-down.’

Mr Woodford told Fidelity: ‘The trust was created to invest in early-stage British businesses – companies that take time to mature but with the potential to drive real innovation – and some have already achieved extraordinary success. One holding, Oxford Nanopore, has revolutionised DNA sequencing and was valued at more than £3bn when it floated in 2021, while Atom Bank has contributed to the digital transformation of banking and Immunocore is a highly successful leader in T-cell receptor therapy.

‘The decision to wind up the trust is ultimately for shareholders, but it doesn’t diminish the achievements of the companies it supported. Not every investment delivered as hoped, and some are still on their journey. That’s the nature of investing in early-stage, high-growth companies. But many of these businesses are thriving, and many more have the potential to do so in the future.’

HgCapital: a rare warning

Investors in the private equity trust HgCapital should sell their shares because they are ‘looking expensive’, according to Stifel, the stockbroker. The recommendation comes despite the fact that Hg has produced the third-best gain of all investment trusts over the past decade of 536% in share price total return terms, according to the Association of Investment Companies, the trade body for trusts.

It is rare for brokers to issue an outright ‘sell’ note on a trust, especially one as highly regarded as HgCapital. However, it is also rare for any trust, and especially a private equity trust, to trade at a premium at the moment and Stifel pointed out that rival trusts were trading at significant discounts.

‘With the [share] price of 538p trading on a small premium to the latest NAV of 521p at 30 September, we think the shares are looking expensive, especially when compared to many other more diversified private equity peers,’ Stifel said on 19 November. ‘With the price having risen from 500p at the start of October to 538p, there are some profits for trading clients to take and hence we downgrade the recommendation to sell from hold, with a fair valuation of 480p.’ The shares were trading at 529p and a 2% premium to NAV at the time of writing.

Nick Train’s Finsbury G&I faces wind-up vote

Finsbury Growth & Income, run by the veteran ‘buy-and-hold’ investor Nick Train, will face a continuation vote after its annual report spoke of ‘another year of underperformance’ by the trust relative to its benchmark.

The chairman said: ‘Your board will hold a continuation vote after the current financial year ends in September 2025 (expected to be held at the company’s AGM in January 2026). This will offer all shareholders, in particular our retail shareholders, who represent a significant proportion of our register, an opportunity to express their support, or otherwise, for the continuation of the company with its current investment strategy.’

He said, however, that during consultations with institutional shareholders ‘no shareholder has expressed to us any appetite for a material change in approach’ by the trust.

In the year to the end of September the trust gained 3.4% on a share price total return basis while its benchmark index, the FTSE All-Share, returned 13.4% on the same basis.

Miton trust to disappear

The list of trusts being wound up continues to lengthen as the Miton UK MicroCap Trust, managed by Gervais Williams and Martin Turner of Premier Miton, announces plans to wind itself up.

In a statement on 18 November it said: ‘The board has concluded that it is in the best interests of shareholders to put forward proposals for a voluntary winding up of the company. The board … has started discussions with Premier Miton about … a rollover into one of Premier Miton’s open-ended funds.’ In that event it is expected that a cash exit alternative would also be offered. The winding up of the trust will be subject to shareholder approval and the board said further announcements would be made when appropriate.

‘Reset’ for Edinburgh Worldwide

Edinburgh Worldwide, which is managed by Baillie Gifford, is to gain two more managers, cut the number of its holdings and implement ‘changes to process and approach to improve decision-making and portfolio discipline’ in what it called a ‘reset’.

Luke Ward and Svetlana Viteva will become co-managers alongside Douglas Brodie while the number of holdings will be changed to 60-100 from the present 75-125 to enable ‘more regular and deeper engagement with those companies’. A shareholder meeting to approve the changes will be held on 18 December.

Energy trust drops ‘sustainable’ from name

VH Global Sustainable Energy Opportunities has changed its name to VH Global Energy Infrastructure. Regulators are forcing funds to justify any claims to sustainable investing and some have reacted by removing such references from their names.

PRS REIT in sale discussions

PRS REIT, which owns rental properties, announced in October that it was conducting a review of its strategic options, including a potential sale of the trust. This week it said its board was ‘in active discussions with a number of interested parties in relation to a potential sale’.

The board will also ‘continue to explore all the options available to the company focusing on maximising value for the company’s shareholders’. It said it would update shareholders in the first quarter of next year.

JPMorgan Asia G&I loses manager

One of the managers of JPMorgan Asia Growth & Income, Ayaz Ebrahim, stepped down this week with immediate effect after eight years in the job. He has been promoted to a senior role at JPMorgan Asset Management.

The trust said the portfolio would continue to be managed by Robert Lloyd and Pauline Ng. Mr Lloyd, who is based in Hong Kong, has been co-manager for the past six years. He and Ms Ng, who is based in Singapore, have worked within the team for more than 15 years.

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Investment trust shares are listed on the London Stock Exchange and their price is affected by supply and demand. The investment trust can gain additional exposure to the market, known as gearing, potentially increasing volatility. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.