- Nick Greenwood steps back
- Fewer, larger investments
- Lower management fee
Specialist closed-end investor MIGO Opportunities Trust (MIGO) revealed a change of co-manager and a new portfolio approach to give it a greater say in its investee companies.
The market took the news in its stride, with MIGO shares flat at 352.5p in mid-morning trade.
NEW CO-MANAGER
Asset Value Investors, which manages the company, said Nick Greenwood would step back from his role as co-manager after more than 20 years and would take up a consultancy role.
From today (18 June), Charlotte Cuthbertson will be joined in co-managing the company by AVI director and fund manager Tom Treanor, ably supported by the firm’s 11-strong research team.
‘Having worked closely with Charlotte for eight years and with Tom for the past two, I know MIGO is in excellent hands as I hand over full portfolio responsibility to them,’ commented Greenwood.
‘Charlotte and Tom are well known in the sector, and to many of our investors, as tough but fair champions of shareholder value. As a longstanding MIGO shareholder, I look forward to seeing the returns from their hard work.’
NEW APPROACH
The firm also said it would implement a ‘higher-conviction approach’ which would mean focusing on 10 to 15 core holdings rather than the 40 holdings in the fund at present.
‘The current market conditions and a more focused portfolio are expected to give MIGO a powerful lever to exploit dislocations more quickly,’ said MIGO chairman Richard Davidson.
‘Fully exploiting the opportunity set requires MIGO to stay nimble, so we propose to cap NAV (net asset value) at £150 million, returning excess capital to shareholders. The updated fee structure incentivises performance versus asset-gathering. We expect these changes to strengthen the delivery of higher and sustainable returns.’
As part of the new approach, the board has agreed a revised fee structure with AVI, reducing the annual management fee from 0.65% of market cap to 0.35% on the lower of MIGO’s market cap or NAV.
There will also be a performance fee payable to AVI of 15% of NAV total returns in excess of SONIA (the Bank of England’s Sterling Overnight Index Average, which is currently 4.21%) plus 3%, subject to a ‘high watermark’.
Overall fees payable to AVI in any year will be capped at 2.5% of the lower of MIGO’s market cap or NAV, which the company estimates will be lower than previously until such point as NAV total return exceeds around 9% per year.
