Shareholders of the BlackRock Absolute Return Strategies investment trust are to vote on amending the fund’s investment policy and objective in order to allow for a managed wind-down of the portfolio.
Plans for a managed wind-down of the trust were first released at the end of May, but the board today provided further details which include the proposal to terminate at its discretion the use of currency hedging.
Shareholders will vote on the proposals at an extraordinary general meeting, to be held on August 18.
Ewan Lovett-Turner, an associate director, investment companies research at Numis Securities, says the board has indicated to manage the portfolio in a “balanced manner” until a significant amount of the proceeds can be returned via a compulsory redemption of shares.
He says this suggests capital may not be returned until mid/late 2012. However, he expects most shareholders to be comfortable with this strategy because the management team has delivered good performance.
Although the trust will still charge a management fee of 1.5% of net assets and a performance fee, there will be no management fee payable on cash.
“The Board has committed to maintain the listing for as long as possible, which we believe is positive for many private client wealth managers and other shareholders who are reluctant to hold unlisted investments,” Lovett-Turner says. “We believe that it is worth existing investors holding on to the shares.”
The trust’s sterling share class, which has a market capitalisation of £96m, is trading on a discount of 9.2%.
Liquidations have hit the investment trust hedge fund sector in recent months, with corporate activity stepping up after most vehicles failed to deliver.