March Fund Round-Up: ETF Launches and Investment Trust Changes

ETF launches from Invesco and Amundi, JPMorgan makes changes at its American trust, Woodford rebalances and Lindsell Train investment trust premium soars

Emma Simon 28 March, 2019 | 10:01AM

Blockchain

There was a flurry of new fund launches this month. Man GLG unveiled its new High Yield Opportunities fund, which will be run by Mike Scott, who was poached from Schroders late last year.

There were also new ETF launches. While many of these have targeted traditional equity and fixed income markets, Invesco has launched a new ‘blockchain’ ETF which aims to give investors exposure to companies using this cutting edge technology.

Investment trusts were also in the news. One of the most popular investment trusts – Lindsell Train Investment Trust (LTI) – saw its premium soar to 70% on the back of stellar performance.

Elsewhere investment trusts that have not seen such enticing returns have been taking action to try to turn around performance. To this end, JPMorgan American Investment Trust (JAM) announced that its veteran manager Garrett Fish would be stepping down, and it is also changing its fee structure.

Meanwhile, Aberdeen Smaller Companies Income Trust (ASCI) has announced that the new manager has finished a six-month review to strategically rebalance its portfolio. While this will remain an income trust, the company says it wants to ensure the trust also has a growth focus.

Man GLG to Launch New High Yield Fund

Man GLG will launch a High Yield Opportunities fund, which will be run by Mike Scott — who joined the company from Schroder at the end of last year.

Scott previously ran Schroders High Yield Opportunities fund for 12 years. He says this new fixed income fund will adopt “the same process and philosophy”. However he says it will also benefit from Man GLG’s “performance driven platform” that utilises the latest technology and sophisticated risk analytics.

This will be an unconstrained fund and will use a regional and sector-agnostic approach to selecting fixed-income securities.

The fund aims to deliver a high level of income and strong total returns throughout the market cycle.  The fund will initially focus on cash-generative and less cyclical businesses, which have reached “attractive valuations”, according to Man GLG.

Woodford Rebalances Equity Income Portfolio

Woodford Investment Managers is reducing its exposure to unquoted stocks within its flagship Equity Income fund.

The fund will sell some of these stocks to Woodford Patient Capital Trust (WPCT), the investment trust also run by manager Neil Woodford.

The Equity Income fund will increase its holding in this investment trust, so investors still have exposure to this sector, although through a listed collective fund.

In a statement the firm said the move has been made ahead of any potential regulatory changes, following the regulator’s discussion paper on Patient capital and authorised funds.

Woodford Investment Management chief executive Craig Newman says: "The Woodford Equity Income Fund has always aimed to deliver a growing income stream and a total return by investing predominantly in listed stocks, with some exposure to unquoted holdings to generate excess returns from disruptive technologies. These objectives remain firmly intact.

“Neil is as passionate on the unquoted asset class as ever but having listened to feedback from clients we believe that moving the exposure to the asset class via a collective fund rather than individual unquoted stocks makes sense - both operationally and from an investor view.”

Woodford IM added exposure to individual unquoted holdings within the Equity Income portfolio will be further reduced as companies reach a "more mature stage of their growth cycle".

Some of the transferred holdings include Atom Bank, Carrick Therapeutics, and RateSetter.

Invesco Launches Blockchain ETF

Invesco is launching a new ETF that aims to capitalise on the growing number of companies using blockchain technology.

In order to launch this ETF, Invesco has partnered with Elwood Asset Management, which runs a blockchain global equity index.

The ETF will be listed on the London Stock Exchange and will have an ongoing charge of 0.65%. It will invest globally, in both developed and emerging markets.

The largest sector allocations in the index are currently information technology and financials, with 46% and 23%, respectively. On a geographical basis weighting is skewed towards the US, with 39% of the portfolio, and Japan (29%).

Invesco’s head of ETFs Gary Buxton says: “We believe the potential for blockchain technology to disrupt the status quo of companies in virtually every industry makes for a strong long-term investment case.”

Blockchain is best known as the technology that sits behind cryptocurrencies like Bitcoin. However, Invesco says it potential extends far beyond this current usage.

Amundi Launches New ETF Range

Amundi has launched a new range of nine ETFs, investing in equities and fixed income.

This range will be listed on the London Stock Exchange, and based on underlying indices designed and provided by Solactive. These ETFs all carry an ongoing charge of 0.05%.

These ETFs cover both large and mid-cap stocks in various regional markets, including Europe, USA and Japan. One Europe ETF, for example, tracks the Solactive Euro 50 index, which includes the 50 largest Eurozone companies weighted by free-float market capitalisation.

Portfolio Overhaul for Aberdeen Investment Trust

The manager of the Aberdeen Smaller Companies Income Trust (ASCI) confirmed that the portfolio has now been revamped to give the trust more of a growth focus.

Abby Glennie became sole manager of the trust in September 2018. She had previously worked as part of Harry Nimmo’s smaller companies team at Standard Life, and worked on this trust with Aberdeen Asset Management’s Jonathan Allison when the two groups merged.

Rather than merging with Nimmo’s Standard Life UK Smaller Companies Trust (SLS) this has remained a separate investment vehicle as it has more of an income focus.

Since taking over the trust Glennie says she has reshaped the portfolio to reflect the quality, growth and momentum process the team is known for.

Glennie says: “What makes this trust different to Harry's is the income element, which is a new aspect for us. We have simply taken our existing process and put an income tilt on it.

“I initially thought this would be a challenge. But when we started the process I found that was not the case as we already had a positive view on many of the holdings.”

Leading US Investment Trust Replaces Manager

Garrett Fish, the long-standing manager of JPMorgan American Investment Trust (JAM) will step down from this role as the board eyes a new strategic direction.

The board of the investment trust says it will now adopt a “higher conviction” approach to the large-cap portfolio, which currently accounts for more than 90% of its portfolio.

It is also said that performance fees will be scrapped, and it will waive management fees for nine months – from June 1 – to make up for the trust’s underperformance, due to historic fee arrangements.

The board has proposed that Jonathan Simon and Tim Parton become co-lead manager of this new “equity focus strategy”

Simon manages JP Morgan Mid Cap Value, Value Advantage Strategy and the US Value funds. Parton is manager of the Mid Cap Growth and Multi-Cap Growth strategies.

JP Morgan says Fish will take on “new responsibilities” within the firm.

Warning for Investors Buying Into Lindsell Train IT

Demand for shares in the five-star rated Lindsell Train Investment Trust (LTI), run by veteran manager Nick Train have pushed the premium up towards 75%.

Over the last year, this premium has risen from 22% to 72%, meaning existing shareholders are sitting on significant gains. However, there are fears that this could mean capital losses for newer investors.

In September 2016 the trust’s shares were trading on a similar premium, and the management warned investors to be wary as there was a “significant mismatch” in the valuation of the trust and its share price.

Part of its appeal is that this trust invests in the unquoted parent company Lindsell Train. Train runs a number of closed-end and open-ended funds, most of which have delivered outstanding returns in recent years.

AJ Bell head of active portfolios Ryan Hughes says: “The trust has always been highly sought after as investors see it as a way to gain exposure to the long-term processes of Nick Train.”

Music Investment Trust Acquires New Assets

The music-based investment trust Hipgnosis Songs (SONG) has acquired three new catalogues of music.

This includes those from writers Johnta Austin, Sean Garrett and Rico Love. These catalogues includes the performance rights and royalties to hit singles from artists such as Beyonce, Mariah Carey and Mary J Blige.

This trust listed last year, after a series of delays, and purchases songs and associated copyrights, enabling investors to profit from music royalties.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Aberdeen Smaller Companies Inc Ord288.00 GBX0.00
Hipgnosis Songs Ord106.00 GBX0.00
JPMorgan American Ord479.00 GBX0.31
LF Woodford Equity Income C Sterling Acc95.35 GBP0.08
Lindsell Train Ord1,510.00 GBP-0.49
Standard Life UK Smaller Co. Ord483.00 GBX-0.21
Woodford Patient Capital Trust54.00 GBX-2.00

About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for Morningstar.co.uk

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