Shareholders in Govett Asian Smaller Companies are to vote on 25 June on whether to liquidate the in...
Shareholders in Govett Asian Smaller Companies are to vote on 25 June on whether to liquidate the investment trust, writes Adam Lewis.
This follows a requisition received by the trust board on 4 May from Regent Europe which has a stake in the trust.
James de Sausmarez, managing director of investment trusts at Govett Investments said that the board believes approval of the resolutions would undermine the significant benefits for long-term investors which are inherent in the company.
He said: 'The resolutions would mean that shareholders would incur the costs of realisation and liquidation, estimated to be approximately 10% of net assets, that would mean the loss of an investment which has performed well relative to its benchmark, and they would mean forced sales of the portfolio at a time when the market is, or is close to, bottoming out.'
De Sausmarez added liquidation would reduce the already limited Asian smaller companies sub-sector and deprive potential investors of a vehicle with an independent board and the ability to gear in the interests of long-term decision making.
Govett is looking at several measures to close the discount to NAV on the trust, which now stands at 16.6%. The board wants to renew its authority to buy-back shares and proposes to offer shareholders the chance to extend the company's life within the next three years.
In addition the board and manager intend to limit the total expense ratio of the company to 2.2% and also look to improve demand for shares by marketing more heavily among retail investors. Over three years to 1 May the trust's shares have returned -2.55% compared with a return of -24.03% over one year and -11.94% over three months.
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