The Renn Universal Growth Trust is set to close after its directors have recommended the underperfoming vehicle be wound down, despite a recent resurgence in performance.
Manager of the trust Russell Cleveland told Wealth Manager the decision had been taken as he is nearing the company's manager age limit of 75.
'Many years ago the trust established a policy of retirement for board and manager of 75. Unfortunately, I am 74!' Cleveland explained.
'Additionally the board wanted to narrow the discount and provide liquidity to shareholders, many whom have been with the trust for years. On our record, while the last five years have been volatile, our record since inception has been very good, beating all the major averages,' he added.
The Texas-based trust invests in North American smaller companies and was one of the top 10 best performing investment trusts of the last year as manager Russell Cleveland delivered 30% growth in share price over the last year alongside 20.77% appreciation in net asset value.
But despite enjoying strong years in 2008 and 2012, it has underperformed its comparator index on a five and three-year basis.
Renn’s board of directors consulted with larger shareholders over the future of the trust, and a statement said it was ‘in the best interests of shareholders’ if the trust is wound down. All shareholders will be given the chance to vote on the move at the upcoming annual general meeting in July 2013.
The statement read:
* The directors have decided that it will be in the best interests of all shareholders if:
* The company were to proceed with a managed wind-down of its investment activities;
* The company’s listing were to be maintained for as long as is practicable during the wind-down period; and
* An initial return of capital were to be made to shareholders as soon as sufficient cash becomes available, which is expected to be in the first quarter of 2014.
The trust invested in a small pool of US companies which were majority owned by their original founders, and predominantly focused on healthcare and technology stocks.