UK asset manager Schroders has been picked to manage the investment trust once run by Neil Woodford, sending shares in the investment vehicle up almost 30 per cent on Thursday.
Mr Woodford resigned from managing the Woodford Patient Capital Trust last week after his flagship Equity Income fund was closed by its administrator, triggering the implosion of his investment empire.
WPCT’s board has been in discussions with other asset managers about replacing Mr Woodford since his flagship Equity Income was suspended in June. Relations between the stockpicker and the board soured further over the summer after the fund manager sold £1m of his personal shares in the trust and did not inform the board for three weeks.
Schroders will not take a management fee for three months after it officially takes over, after which it will charge investors an annual fee of 1 per cent or 0.8 per cent depending on the size of the assets, the trust said in a statement.
The investment trust, which was the UK’s biggest when it raised £800m in 2015, was designed to invest in companies with the potential to grow significantly over the long term, leaving its holdings weighted in favour of small and unlisted companies.
Shares in WPCT have tumbled this year after the trust’s board, led by chair Susan Searle, was forced to write down several of its biggest holdings in recent weeks. That has reduced its net asset value by more than 13 per cent to 63.23p per share.
“Schroders will be a good outcome for the trust’s management as I trust their judgment for stock selection and risk control, which the previous incumbent Neil Woodford doesn’t seem to appreciate or even comprehend, ” said Ian Hunter, an investor in WPCT.
WPCT said it had agreed terms with Schroders for it to take over the portfolio by the end of the year, and that the vehicle will be renamed the Schroder UK Public Private Trust plc.
Ms Searle said hiring Schroders followed a “competitive process”. She added: “I would like to thank our shareholders for their support throughout this process as we have worked to put in place the right portfolio manager against the background of challenging circumstances.”
Mr Woodford had not taken a fee for managing WPCT as he had failed to meet performance targets
Schroders, which has been managing investment trusts since 1924, said it intended “to manage the portfolio in line with the trust’s existing investment objective and policy”.
The share price of WPCT crumbled to a record low of 31.3p this week, but jumped to 37.5p on Thursday morning. However, as recently as January it traded at 90p.
Alan Brierley, an analyst at Investec, cautioned that despite the euphoric reaction, “we see no quick fix here”. He added “we expect to see more gremlins before any unicorns, while a high level of retail investors is likely to contribute to high levels of share price volatility”.
Mr Hunter added that the board of the trust should resign now that they had “at last acted to add value to the trust for the first time”.
Woodford Investment Management declined to comment.
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