New faces don’t solve old problems – why strategy also matters when it comes to investment trusts
Changing managers often fails to boost a trust’s performance, says Max King. When a trust is underperforming, a change in management may not be the solution.
The Baillie Gifford Shin Nippon (LSE: BGS) trust has had a miserable performance over the past five years, with shares trading at a 10% discount to net asset value (NAV). Despite 20% of the share capital being bought back, the directors have acknowledged the need for an immediate turnaround in performance.
The directors have stated that if poor performance continues, they will explore “all available options”.
This has led to speculation about potential changes, including a tender for 15% of the share capital at a 2% discount in 2027, and possibly a change of manager and strategy.
Author's summary: Strategy matters in investment trusts, not just new faces.
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