CEF Times: 3-9 March
Bluehone AIM VCT 2 (BHN) is proposing to change its investment objective to allow it to become more generalist in its investments, rather than specifically focused on AIM stocks. This follows the change in investment manager in February to Maven Capital Partners UK LLP, previously the private equity division of Aberdeen Asset Management. If approved at the AGM on 30 March, this will also allow the company to realise some of its AIM investments in favour of more established businesses.
The discount control mechanisms have been triggered at both Dexion Absolute (DAB/L) and Dexion Trading (DTL) so continuation resolutions will be put to vote for both companies within the next four months. Neither fund may trade at an average discount to its NAV of more than 5% over 12 NAV calculation dates. In the case of Dexion Absolute, a continuation resolution is required for all three share classes (GBP, EUR, USD) as all three are in breach of this control mechanism.
It’s not a good week for Dexion. Proposals have now been released for the winding up of their Commodities fund (DCLE), as first announced in December 2010. There are two planned general meetings at which shareholder approval will be sought to implement these proposals.
Foreign & Colonial Investment Trust (FRCL) has axed its performance fee in a move to keep costs low. In 2008, the fund’s TER was 0.59% but in 2009 this rose to 0.73%. Further, the structure was overly complex, with fixed fees as well as performance-based fees, in an environment where performance fees are increasingly common in the marketplace. F&C Asset Management will in future take an annual fee of 0.365% on the market value of the fund – a much cleaner approach.
Trading in M&G Equity shares (MEQC) has been suspended following shareholder approval of the voluntary wind-up and reconstruction of the company. Split-capital trust M&G High Income is the biggest winner, with GBP 74.5 million transferring into the fund. Morningstar Superior- and OBSR AA-rated M&G Corporate Bond picks up just under GBP 5 million, and OBSR A-rated M&G Global Dividend around GBP 15 million. Nearly GBP 74 million has been taken in cash by shareholders, which is nearly half of the original M&G Equity fund’s value.
Global fund of hedge funds Tapestry (TIC) has also seen its shares suspended as shareholders approved the voluntary liquidation plan. This is another fund which traded at a marginal discount to its NAV until the market collapse in late 2008, and has since struggled to regain ground. Now at just GBP 20 million in total assets, the fund’s TER had also leapt, from 1.9% in 2008 to 2.64% in 2009, and we have yet to see what the impact was on the TER in 2010.
The board of Thames River Hedge+ EURO (TRMB) have decided not to implement the discretionary redemption facility in June and December 2011, as currently they cannot make adjustments to NAV to reflect the true cost of selling illiquid investments. They plan to amend the Articles of Association to make the process fair for all investors and not just beneficial to those redeeming units. We like their recognition of the imbalance towards their shareholders and that they’re taking action to amend this.
