New Faces Don't Solve Old Problems
Changing managers often fails to boost a trust's performance, says Max King. When a trust's performance is poor, a change in management may not be the solution. The case of the Baillie Gifford Shin Nippon trust illustrates this point.
After five years of miserable performance, the trust's shares are trading at a 10% discount to net asset value (NAV), despite 20% of the share capital having been bought back. The directors have acknowledged the need for an immediate turnaround in performance.
The directors have stated that if poor performance continues, they will explore "all available options".
This has been presumed to mean not just a tender for 15% of the share capital at a 2% discount in 2027, but also a possible change of manager and strategy. Author's summary: Strategy matters in investment trusts.
- Poor performance may not be solved by changing managers.
- A change in strategy may be necessary for a turnaround.