By Pascal Dowling Shareholders in the Friends Provident Ethical Investment Trust (FPEIT) have until...
By Pascal Dowling
Shareholders in the Friends Provident Ethical Investment Trust (FPEIT) have until 25 January to transfer their investment into the group's Geared Opportunities Income Trust (Goit).
The option to rollover into the trust, first reported in Investment Week, is likely to raise at least £80m for the new vehicle.
It was first proposed in November as part of a package of possible rollover options provided by the board of FPEIT when it announced proposals for the early wind-up of trust.
Other options include the opportunity to transfer money into the AA-rated Stewardship ethical unit trust launched in 1984, or redemption of shares for cash.
Shareholders approved the board's intention to wind up the trust at an EGM on 31 December. Peter Arthur, managing director of investment trusts at Friends Ivory, said the early closure was not an indication of shareholder dissatisfaction.
FPEIT was launched in 1993 on a simple split capital investment trust structure made up of ordinary shares and zero dividend preference shares.
Primarily invested in UK companies, the trust also had exposure in Europe, North America, Japan and the Pacific.
Holdings in the FPEIT portfolio had to match up with a number of ethical criteria, while still being capable of justifying a position in the portfolio on pure investment grounds. According to Arthur, the trust was run along very similar lines to the £636m Stewardship unit trust and shareholders transferring into the unit trust following the wind up will find a similar investment style to that of FPEIT.
Stewardship, managed by Richard Lowman, is ranked 117 out of 233 funds in the UK All Companies sector for the three years to 13 December 2000. The fund has offer to bid returns of 28.8% against a sector average of 33% over that time period.
Shareholders who opt to rollover into the new Friends Ivory & Sime investment trust will receive a number of benefits, according to Arthur.
Zero dividend preference shares in the Goit will be issued at a discount of 1.5% to existing FPEIT shareholders who opt to rollover.
They will have a final redemption value as at 2 February 2008 of 182.8p and a redemption yield of 9.24% comparing well against the current FPEIT redemption yield of 8.1%, he said.
Goit will consist of a highly geared portfolio managed by John Stubbs, manager of the British Assets Trust.
The initial portfolio will comprise 67% in high yielding split capital investment trusts with an aggregate yield of 9% or more, and 33% in the shares of conventionally structured investment trusts yielding an aggregate of around 2.2%.
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till