Woodford-backed investment trust in merger after underperformance

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The underperforming P2P Global Investments trust, backed by Neil Woodford, is to be jointly managed by its current manager MW Eaglewood and private equity specialist Pollen Street Capital, following the merger of the asset managers.

The merged firms will manage approximately £2bn in assets.

Pollen Street already manages the Honeycomb investment trust, which also invests in the alternative lending space and has returned 19.8 per cent over the last year compared to 5.8 per cent in the P2P Global Investments trust, according to FE data.

However, P2P Global has delivered more positive results in the last three months returning 11.1 per cent compared to 5.8 per cent in the Honeycomb investment trust.

In April, the board of P2P Global confirmed it was reviewing its investment management arrangements following disappointing performance in 2016.

As part of the merger, the investment strategy for the fund is being revised and the portfolio will transition to “more attractive specialist assets”, a London Stock Exchange announcement says.

This will include greater exposure to Sterling denominated assets and maintaining exposure to a “tighter group” of market place lending platforms.

It will seek returns of 6 to 8 per cent, but this may take up to 18 months to achieve, the announcement says.

Fees will be revised to comprise an annual management fee of 1 per cent of net assets and a performance fee of 15 per cent in net assets, subject to a hurdle of 5 per cent.

Ian Wace, chief executive of Marshall Wace, which is the current parent company of MW Eaglewood and will remain a significant shareholder, says they had been challenged to come up with a strategic solution for the management of the trust and to enhance returns by the P2P Global Investments board.

“We accepted their challenge and the result is an outcome which is truly transformative, creating a major new industry player with deep and market leading capability in specialist credit.”

The investment trust is a 0.85 per cent holding in the £10bn Woodford Equity Income fund, but does not feature in the Income Focus fund or Patient Capital trust.