The board of M&G’s £142.3m Credit Income investment trust plans to issue more shares to boost the size of the vehicle, it said this morning (29 September).
In the fixed income trust's half year report, chair David Simpson said the board intended to boost its assets to lower costs and improve portfolio diversification.
The trust raised £14.2m in early June through a share placement, timed to take advantage of "favourable opportunities arising from the market dislocation due to the Covid-19 pandemic and the reopening of the private debt markets", Simpson said.
"The company will continue to issue new shares at a premium to NAV when appropriate conditions arise," he added.
Shares in the trust, which was launched in 2018, were priced at 101p each at the end of June 2020, marking a 3.88% premium.
However, since then the share price has slipped to 93.5p as of 28 September, a discount of 4.9% relative to the value of the portfolio.
M&G's management fee for the trust of 50 basis points has not been increased as originally planned, Simpson explained.
Despite the manager's long-term confidence in the strategy, the chairman said the "unprecedented level of government stimulus" had made it difficult to find value in public markets. However, the trust was still able to find opportunities in private assets, he added.
Simpson also endorsed new manager Adam English, who took charge of the portfolio in May this year following the retirement of Jeremy Richards, who ran the trust since its launch.
English was previously Richards' deputy and has worked with him on credit portfolios at M&G for more than 20 years.
"The board has worked closely with Adam and the wider investment team since the launch of the company and has full confidence in Adam's ability to continue to build the portfolio in line with the investment mandate," Simpson said.