Gervais Williams to resume control of Henderson Fledgling Trust

Gervais Williams and Martin Turner will run the Henderson Fledgling Trust (HFT) following its merger with their Diverse Income Trust .

Following a strategic review, the HFT board has decided to seek shareholder to approval to transfer the trust to Miton Capital Partners’ Williams and Turner.

The move will see Williams (pictured) return to the trust which he managed for 10 years from 2001 when at Gartmore.  

The merger has already been given the green light by major shareholders M&G Investment Management and AXA Investment Managers, which own 40.9% and 14.3% of the trust respectively.  

HFT, which is managed by Adam McConkey and Harmesh Suniara, has an investment objective of delivering long-term growth in capital and dividends predominantly from constituents of the FTSE Fledgling. It employs a hybrid investment style, whereby at least 65% of the portfolio passively replicates the Fledgling Index with an active overlay applied to the remainder.

While this style has outperformed over the long term, it has come unstuck recently due to structural and cyclical issues, leading to the underperformance of the index versus FTSE All Share and Small Cap indices.

‘In terms of cyclical issues, the economic slowdown has provided a challenging environment for fledgling companies in which to raise equity and cut short-term borrowings,’ the investment company told the London Stock Exchange.

‘For a number of years, new entrants into the Fledgling index have comprised mainly recovery stocks falling out of the FTSE All Share Index rather than new IPO or growth stocks entering the Fledgling index.’

This struggle is reflected in HFT's wide average discount of 20.6% in the 12 months to 13 February.

As the board expects these structural issues to continue, it is proposing to change its approach to match Williams and Turner’s investment style.