Dexion Trading, a £92 million investment trust, is set to close after a buyback offer was oversubscribed.
The trust’s discount level in the final quarter of 2013 triggered a redemption offer for up to 30% of its shares, which was taken up in full by investors.
The fund’s board concluded that ‘in light of the level of tenders for redemption received but unfulfilled’, it would be ‘in the best interests of shareholders that the company put forward liquidation proposals’.
Dexion confirmed that a letter to shareholders detailing those proposals and convening an extraordinary general meeting to determine the trust's future would be published in due course.
Over the past five years Dexion Trading has returned 27.1%, compared with an average of 73.8% from its AIC sector.
Ewan Lovett-Turner, an analyst at Numis Securities, doubted that the winding up of the trust would prove problematic.
‘The liquidation of many listed funds of hedge funds has been complicated by illiquid portfolios, requiring redemption pools for gated funds or those with long notice periods. In contrast, Dexion Trading’s underlying portfolio is relatively liquid and it is a feeder into Permal Macro Holdings, which offers monthly dealing.’