Why is this change happening?
The Board believes that the persistent discount the trust has traded on compared to its net asset value (NAV) has continued to be negative for shareholders. Despite efforts to reduce the discount through buying back shares, the trust has traded on an average discount of -8.63% over the last 12 months. The Board has bought back approximately 69.7 million shares at a cost of over £993 million since April 2022.
At the time of writing the trust trades on a discount of -2.84%.
In addition, the trust doesn’t currently make use of many of the features available to investment trusts, such as investing in private assets or gearing (borrowing to invest).
After considering a number of options and consulting with major shareholders, including activist investor Saba, the result is the proposal to rollover the investment trust into an OEIC. The Board believes the key benefit is that investors will be able to buy and sell the fund at NAV and the current discount will be removed.
What this means for investors
The OEIC will continue to be managed by Simon Barnard who will use the same investment process and philosophy.
We recently met Barnard to discuss the changes and he’s confirmed he won’t make significant changes to the trust if the proposal goes ahead. The fund will remain investing in smaller companies which can add risk.
What investors need to do
Investors can vote on the proposal to rollover the investment trust into an OEIC. The deadline for voting online via the HL platform is 5 February at 7:00pm.
Investors will have the option to either roll over their existing shares into the newly formed OEIC at no cost to the investor, or choose a partial or full cash exit at NAV minus the costs and expenses incurred in the resolution process and the trust’s transaction costs.
UK investors who roll over their investment into the OEIC may do so without triggering a charge to UK capital gains tax. If you choose to take a partial or full cash exit this may result in a chargeable gain depending on your circumstances.
The annual general meeting will take place on the 10 February where shareholders will vote on the proposal to convert the trust into an OEIC. This will include votes placed via HL. A second general meeting will be held on 27 February should the resolution go through, where liquidators will be appointed to begin the process of converting the trust into an OEIC.
How to give an instruction
Log in to your HL account using our website. It’s not possible to give instructions via the HL app
Select ‘View shareholder meetings’
View your shareholder meetings and provide an instruction
You’ll be taken to a website managed by a third party called Broadridge to complete your instruction. HL is not responsible for the content on this website.
Full details on how to vote can be found here - AGMs and Shareholder Voting.
Annual percentage growth
31/12/2020 To 31/12/2021 | 31/12/2021 To 31/12/2022 | 31/12/2022 To 31/12/2023 | 31/12/2023 To 31/12/2024 | 31/12/2024 To 31/12/2025 | |
|---|---|---|---|---|---|
Smithson Investment Trust | 18.13% | -35.25% | 8.18% | 4.88% | 5.57% |
MSCI World SMID Cap | 18.27% | -8.28% | 9.65% | 12.05% | 10.75% |
AIC Investment Trust - Global Smaller Companies | 8.63% | -26.99% | 1.52% | 12.98% | 5.22% |
More about the Smithson Investment Trust key information can be found on the Smithson website.