News that both Mid Wynd International (MWY ) fund managers are leaving Artemis has not gone down well with analysts at the investment trust’s broker, JP Morgan Cazenove.

Christopher Brown and Adam Kelly downgraded the £450m global investment trust from ‘overweight’ to ‘neutral’ today saying the announcement of lead fund manager Simon Edelsten’s retirement at the end of the year and the imminent departure of co-manager Alex Illingworth was ‘sudden and disappointing’.

Although a 10-month handover between Edelsten (pictured above) and his replacement, Alex Stanic from JP Morgan, was helpful, the analysts believed the arrival of a new team would inevitably lead to changes in the thematic fund’s stock selection that had been instrumental in its success.

‘In our view the key to the success of MWY was the stock picking of its incumbent management team and so losing both the key individuals is a poor outcome for shareholders,’ said Brown and Kelly.

From May 2014, after Artemis won the mandate from Baillie Gifford, up to the end of last year, Edelsten and Illingworth delivered a 184% total investment return that beat the 141% of the MSCI All Country World index, although the analysts noted it was in line with the average of other global trusts, albeit it was achieved with a less volatile share price.

A successful zero discount policy has kept Mid Wynd shares within a narrow 2% band around net asset value (NAV) in recent times, they said. Friday’s news saw it drop through that band, falling 3% to 4.5% below NAV.

Although that is a narrow discount in a sector where trusts stand 10% below NAV on average, it compares poorly to Mid Wynd’s 0.4% average premium above NAV in the past year. As a result, it generates a lowly Z-score of -2.7, according to Numis Securities data, making it the ‘cheapest’ trust in the UK currently.

Z-scores are the measures that analysts use to assess how far a share is trading from its average discount or premium. A score of -2 or below is viewed as ‘cheap’ and 2 or more is regarded as expensive. Investment Trust Insider uses the Z-scores in our weekly Trust Watch column.

Brown and Kelly said the strong investment performance of Mid Wynd helped ‘the shares maintain a higher rating than peers, in our view, and anything which risks derailing that could make the discount policy difficult to sustain’.

Stanic, who ran the JPMorgan Global Unconstrained Equity fund during his seven years at JPM, will be assisted by Bobby Powar and May Laghzaoui, who joined Artemis in late 2021, the analysts said.

After the market closed on Friday, the trust bought 175,000 shares in response to the wider discount, its first buyback in nearly six months.

Numis said it was not a shock to see Edelsten, a 61-year-old former fund manager at Taube Hodson Stonex, retire, or that his departure was causing ‘wholesale changes’.

‘It would also be interesting to know what other options the board considered given we expect many management groups would have been interested in the mandate,’ Niumis added.