The board of the EP Global Opportunities investment trust has moved to become a self-managed vehicle, following an extended period of underperformance under its current model of outsourcing management to Franklin Templeton.
Should shareholders and the regulator approve the move, EPG will also shift its investment policy to allow it to invest in other financial assets, including unlisted companies, and other investment trusts and funds investing in a range of different asset classes.
In addition, EPG will have the ability to allocate a portion of its assets to be managed by ‘one of more’ external ‘specialist’ investment management teams.
EPG’s board announced a review of the strategic direction of the company earlier this year
But Franklin Templeton will continue to be involved with EPG’s management, with current portfolio manager Dr Sandy Nairn to be appointed as a director with day-to-day responsibility for investment management of the trust.
EPG’s board announced a review of the strategic direction of the company in its half-yearly report for the period to 30 June.
The trust, which invests in ‘undervalued’ securities, has underperformed global equity investment trust peers from both a share price and net asset value total return perspective over one, three, five and 10 years, Association of Investment Companies’ data shows.
Over 10 years, its share price is up 112.6 per cent compared to a peer average of 422.7 per cent over the same period. EPG is currently trading at a 13.3 per cent discount to NAV of £320million.
EPG’s largest exposure from a regional perspective is Japan at 14.6 per cent of the portfolio, followed by 12.4 per cent allocated to the UK.
EPG’s share price has struggled versus global peers
The world’s largest equity market, the US, represents just 2.1 per cent of the portfolio.
Its portfolio is currently just 60.3 per cent invested, with ‘cash/cash equivalents’ representing 34.9 per cent of its exposure.
EPG shares bounced by 2.9 per cent in response to the proposals to 285p.
Under the board’s proposals, Nairn will continue to work for the Franklin Templeton group and as part of this engagement he will be responsible for a new sub-advisory arrangement which EPG will enter into with firm.
It is expected that the sub-advisory arrangement will initially be for 70 per cent of the company’s portfolio.
The board will undertake consultation on the proposals with shareholders in the coming weeks, with EPG to convene a general meeting ‘in due course’.
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