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IFAs attack Gartmore&#39s refusal on zero payouts

IFAs have slammed the split-cap Gartmore monthly income trust for refusing to redeem zero shareholders in full on the due date despite having the money to do so.

Gartmore admitted last week that it intends to pay zero customers just 78.4 per cent of their holdings at the end of the month although more than three-quarters of shareholders voted for full redemption earlier this year.

Blaming difficult market conditions and illiquidity in geared ordinary and income shares, Gartmore said it would wind up the trust in the next two years and pay the remaining assets no later than April 2004.

But IFAs have attacked the decision, claiming the trust&#39s board is riding rough-shod over the wishes of shareholders and hiding behind a legal loophole to avoid complying with the vote.

They say zero holders are being made to pay for the board&#39s decision last year to restructure the trust from being a shared equity trust to the higher-risk monthly inc-ome version.

If the board had not made the switch, IFAs believe the trust would not have run into difficulties. They fear its decision to hold back payments could set a precedent for other trusts.

Simpsons partner Andrew Merricks says: “How is anyone going to trust this board again? The whole thing has been an avoidable disaster for small retail investors and could mean that other trusts winding up also go down this road.”

Gartmore head of investment trusts Vivien Gould says: “The trust has the money but if it were to pay all the people who wanted to exit in full, it may not leave enough to pay the remaining shareholders.”

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