Numis Securities has warned the decision by the board of the £316m Schroder UK Growth investment trust not to mount a short-term defence of its discount target of 5%, which has been missed over the past two years, "sets a worrying precedent for the investment companies sector".
The trust is currently trading on a discount of 11%, in line with its 12-month average. This compares to a long-term target of 5%, which was introduced in 2006 but the board has now stepped back from in the short term. When the policy was put in place, there was the ability for the board to review and amend the target from time-to-time to reflect prevailing market conditions. Against a background of negative market sentiment, the board said it "has been reluctant to commit the substantial shareholders' resources to defend, in the short term, a stated long-term target of 5% which, it h...
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