New Schroders trust to keep discount close to zero
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The new Schroder opus commodity investment trust is to keep the discount at which its shares trade close to zero as controversy continues over how trusts should control their discounts.
Robin Stoakley, the managing director of the UK intermediary business at Schroders, says the trust will have a “firm discount policy” to limit the opportunity for arbitrage.
The trust will buy back shares on a regular basis, most likely twice a year, to keep the discount close to zero. If the trust trades at a premium to the value of its portfolio, it will issue new shares.
Fresh controversy has arisen over discount control mechanisms in recent months. Investors have either advocated them or questioned whether they adequately control the discount at which trusts trade to the value of their portfolios.
In particular, shareholders put pressure on Alliance Trust, Britain’s largest investment trust, to reduce its discount.
The Schroder opus commodity fund will mirror the existing opus commodities core plus portfolio. Scheduled for launch in early July, the trust will manage its investments actively.
It will aim to outperform a benchmark index of commodities by 6-9 percentage points a year over rolling periods of 36 months.
Some 50-90 per cent of the fund will be invested in between eight and 12 specialist managers.
David Mooney, the manager, and his team will contribute a supplementary portfolio.
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