Abrdn Smaller Cos Trust Review Could Result in Cash Exit

The company hasn't ruled out a cash exit for the strategy, but it's also possible it will be consolidated with another investment trust

Alliance News 14 February, 2023 | 8:53AM
Facebook Twitter LinkedIn


Abrdn Smaller Companies Income Trust (ASCI) will undertake a strategic review to consider its own valuation after a prolonged shares discount to net asset value.

Shares in abrdn Smaller Cos surged 17% to 288.00p each in London on Monday morning, while daily pricing figures on its website estimated NAV per share including income to be 303.50p.

The Edinburgh-based investor focusing on UK small-cap stocks said its have shares have continued to trade at "a material discount to their NAV for a prolonged period of time".

"This, coupled with the company being of a small scale, has created challenges in generating improved liquidity in the company's shares and will also restrict the company's ability to grow over time," the company's board said in a statement yesterday.

The company stressed it still believed it remained in a position to generate returns for shareholders. The strategic review will include considering combining its assets with another investment trust, potentially alongside a cash exit. Investors will hear about the board's plans in due course, it said.

An investment trust is said to be trading at a discount when its shares trade below the value of its investment holdings, which could in certain circumstances be seen as bargain territory. When the opposite occurs, it trades at a premium, making the trust expensive.

In certain circumstances, a prolonged discount can be a sign of difficulty, and may be offputting to buyers looking to incorporate investment trusts into their wider portfolios.

By Greg Rosenvinge, Alliance News reporter, with additional commentary from Ollie Smith, UK editor, Morningstar

Independent Opinions. Expert Analysis. Timely Commentary.

Sign Up Here

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.

Facebook Twitter LinkedIn

About Author

Alliance News  provides Morningstar with continuously updating coverage of news affecting listed companies.

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures