Sandford DeLand Asset Management (SDL) has launched an initial public offering for subscription for shares in its new trust, which offers a closed-ended version of its UK Buffettology smaller companies strategy.
The UK Buffettology Smaller Companies investment Trust will invest in a portfolio of 30 to 50 smaller companies (limited to 60) with a market capitalisation of between £20m and £500m, listed on the London Stock Exchange (LSE) or quoted on the Alternative Investment Market (AIM).
Benchmarked against the Numis Smaller Companies plus AIM (Ex-Investment Trust) index, the trust will adopt a long-term investment horizon of at least five to ten years.
Managed by SDL, the trust will adopt the philosophy of Business Perspective Investing, most famously associated with Warren Buffett, which focuses on investing in "excellent businesses bought at a fair price".
Both the UK Buffettology and Free Spirit funds are also managed according to this principle, and each open-ended fund currently is ranked in the top ten of the IA UK All Companies sector over three years, the longest period they have both existed, returning 26.2% and 38.8% respectively, compared to the sector average loss of 7.4%, according to data from FE fundinfo.
The trust, which will be listed on the LSE itself, is seeking to raise a minimum £100m at an issue price of 100p and will have an annual management charge of 0.65%.
Alex Brotherston, CEO of SDL, said: "We are delighted to be increasing the options for investors to access SDL investment expertise with the launch of the UK Buffettology Smaller Companies Investment Trust.
"We see smaller companies as offering a particularly attractive investment universe as they tend to be less well researched by traditional broking houses and therefore less well understood by the investment community.
"The team will build on experience gained from running the UK Buffettology and Free Spirit Funds, combined with embedded knowledge in the smaller quoted company market, which will provide the necessary insight and expertise to take advantage of this opportunity for the trust's shareholders."
Keith Ashworth-Lord, CIO of SDL, who will lead the new trust, added: "The structure of a closed-ended investment trust, rather than an open-ended fund, means that many of the liquidity concerns over investment in smaller quoted companies can be addressed.
"The investment trust structure (and permanency of capital) should ensure that we can take a genuinely long-term investment perspective, thus reducing liquidity risk to the portfolio."
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UK Buffettology Smaller Companies investment trust