TR European Growth (TRG ) has launched a three-pronged attack on its share price discount with plans to change its name, conduct an eight-for-one share split and cut charges in a bid to appeal to more private investors.
The board of the £709m Janus Henderson investment trust has decided to rename it The European Smaller Companies Trust (ESCT), dropping the historic TR initials that date back to the 1970s and 1980s when it was managed by Touche Remnant, a firm that later merged with the Henderson Group, which itself combined with Janus Capital of the US four years ago.
The move, aimed to make it clearer what the trust does under smaller company fund manager Ollie Beckett, is accompanied by plans to split the existing 12.5p ordinary shares into eight new ordinary shares of 1.5625p each. The shares currently trade at £14.31, up 1.1% today, on a 14% discount to net asset value (NAV) of £16.17.
The company said the split was designed to improve the liquidity, or tradability, of the trust’s shares and make it easier for investors to make monthly savings on the main share-dealing websites.
Subject to a vote at the company’s annual general meeting on 29 November, the split will take effect on 13 December.
Janus Henderson has also agreed to cut its tiered annual fund management fee, lowering the initial rate from 0.6% to 0.55% and extending it to a wider band of up to £800m of net assets. The trust previously paid 0.6% a year up to £500m, falling to 0.5%. The upper tier has now been trimmed to 0.45%.
However, the trust will continue to be the only one in its peer group to pay a performance fee, giving Janus Henderson 15% of annual gains when they beat its stock market index by more than 1%.
In a further change the benchmark is being switched from the Euromoney Smaller European Companies index to the MSCI Europe ex-UK Small Cap.
Chairman Christopher Casey said the performance of both indices were very similar, but the move would improve the quality of data available to the investment team and aligned the trust with its rivals.
‘With this combination of changes, we aim to increase demand for the company’s shares which will, in turn, narrow the discount achieving a better alignment of the share price and NAV, and therefore be of benefit to all shareholders,’ Casey said.
The changes follow a strategic review, which while it underlined the need for the trust’s remit, ‘did highlight that more could be done to improve the company’s positioning in relation to the retail investor market,’ which Casey said was growing fast.
The decision to tackle the discount comes after a recent widening in the gap between TRG’s NAV and share price, which stood at 11% at the end of June. It now has the widest discount of its peer group with the sector’s top performer Montanaro European Smaller Companies (MTE ) on a narrow 2% discount, the high-yielding European Assets (EAT ) standing 8% below NAV and only the recently renamed JPMorgan European Discovery (JEDT ) trailing on a similar 13% discount.
TRG’s comparatively low rating comes despite annual results today showing a sparkling rebound in the year to 30 June in which the trust achieved a total underlying investment return of 63.5%, massively beating the Euromoney index gain of 36.5%.
A narrowing in the discount from a five-year low 18% last summer, meant shareholders enjoyed an even higher 79.5% return.
Nevertheless, this leaves TRG’s five-year total shareholder return at 103.7%, half the 207.4% delivered by the higher-rated Montanaro trust managed by George Cooke.
Beckett’s best stocks in the financial year were German e-commerce group Westwing (ETR: WEW) which soared 534%, French marketing technology provider Criteo (CI5A:Frankfurt) which leaped 298% and Dutch wealth manager Lasnschot (AMS: VLK) which advanced 66%. Their gains were offset by losses in Medios (ILM1:Xetra), a German drugs company, Norwegian electricity distributor Fjordkraft (FRA: 1Z) and country mate Aker Biomarine (FRA: 1PG).
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