Buxton’s UK Growth trust moves to wide discount on exit shock

Richard Buxton’s Schroder UK Growth trust, a closed ended fund, has moved onto a wide discount following news of the manager’s departure for Old Mutual Global Investors.

The £300m investment trust is trading on a discount of 9.69%, with shares trading at 153.63p against an estimated net asset value per share of 170.1p, according to FE.

There is a discount policy in place on the trust which seeks to bring it back in through share buybacks if it moves beyond 5% over the long term.

Over the half-year to October 2012, the average discount on the trust was 6.8%.

Shares in the trust have fallen 4.35% since the news of Buxton’s exit from Schroders, where he had spent 11 years running one of the most succesful funds in the industry, the open-ended £3.5bn UK Alpha Plus fund.

Morningstar has placed Buxton’s investment trust, which invests along similar lines to the unit trust, under review.

Director of closed-ended fund research Jackie Beard said the firm would wait for clarity on Buxton’s replacement before making a decision on the trust’s rating. Buxton’s natural successor, deputy manager Errol Francis, is moving with him to take on a new role at Old Mutual, dealing Schroders a double blow.

“It is not yet clear who the natural successor from the Schroder UK Equity team could be,” she said. “Any new management decision will be made in conjunction with the board and we look forward to learning the outcomes of their discussion. Until then the rating will be under review pending clarification on the fund’s future management.”

Earlier this week investors in Buxton’s funds said they were shocked by news of his departure, but many are holding firm until he leaves the firm in June, or until a replacement is announced.

However, last week UK adviser Hargreaves Lansdown removed UK Alpha Plus from its Wealth 150 list of recommended funds.


This article was first published on Investment Week


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