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Scottish Mortgage manager pledges fee cut as trust edges towards a premium
by Eleanor Lawrie on Jan 10, 2014 at 07:00
The £2.9 billion Scottish Mortgage investment trust, is set to cut fees on new shares issued by the trust, whose shares are on the brink of a premium for the first time in more than five years.
'If we are going to issue more shares, we are going to cut the fee. It shouldn't be that managers issue more shares to get more money- that's not the point of the game,' the trust's manager James Anderson said at a presentation at the London Stock Exchange.
Following strong performance, Scottish Mortgage's shares now trade at a 0.8% discount, after operating at a discount as wide as -16.3% in the past five years.
'The fund already has a low on-going charge ratio of 0.51% and this is regarded as a key competitive advantage over other investment vehicles,' Numis analyst Charles Cade said in an investment note.
While analysts were impressed by Anderson's emphasis on issuing shares to reduce volatility and provide liquidity, he added it could be more important that the board 'commits to repurchasing any shares that are issued if the fund subsequently trades back at a discount.'
Over the 10 years to 8 january, the trust's share price has risen 411.1% compared to the AIC sector average return of 281.7%. Its net asset value rose by 334.09% over the same period, according to Morningstar data.
Anderson, who has returned to manage the trust after a six month sabbatical, was also asked about his future at the group after suggesting in the past he would retire when Scottish Mortgage started trading on a premum.
But the manager extolled the virtues of taking time out, which he used to write a book on growth investing, and said he 'would urge everybody in the room to take six months off'.
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on Mar 07, 2014 at 13:36