New Faces Don't Solve Old Problems
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. This is evident in the case of the Baillie Gifford Shin Nippon trust.
The trust has had a miserable performance over the past five years, with shares trading at a 10% discount to net asset value (NAV). Despite efforts to buy back 20% of the share capital, the trust's performance has not improved.
The directors have acknowledged the need for an immediate turnaround in performance and stated that if poor performance continues, they will explore "all available options".
- A tender for 15% of the share capital at a 2% discount in 2027 is being considered.
- A possible change of manager and strategy is also being explored.
Author's summary: Strategy matters in investment trusts, not just new faces.
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