Peter Yates, one of the six non-executive directors of the Invesco Leveraged High Yield Trust (ILH), has recently acquired his first stake in the fund. On 24 September, he bought 100,000 shares priced at 60.75p each.
We are happy with Yates making this £60,750 purchase because, up until now, only three other board members were shareholders. Now, with Yates’ purchase, more than half of the board owns a stake in the trust.
This previous lack of ownership in the trust was disappointing since we believe that fund ownership amongst directors aligns directors' interests with those of shareholders’. A director buying a stake in an investment trust that they're overseeing is also an endorsement of the trust's investment manager.
Generally with investment trusts, the majority of directors will own a stake in the fund that they are overseeing. In the future, it would be preferable if all of the Invesco trust board members eventually bought into the trust to show a full alignment of interests.
There is also a wider shake-up going on at this particular Invesco trust. The board recently underwent a restructuring of sorts. Up until May 2011, the board members hadn't changed since the fund's launch in 1999. This was partly a function of the fund being Jersey-domiciled and thus requiring Jersey- or Guernsey-residing non-executive directors. This rule resulted in a lack of choice when it came to directors.
The rules have now changed so that only two directors must be Jersey or Guernsey-based. This has enabled the board to hire Clive Spears in May 2011 and Yates in August 2012.
One board member also recently left the trust, and two more directors, including the chairman, are stepping down at the end of September.