AVI Global Sees 'fertile Hunting Ground' In UK Investment Trust Sector

About 30% of the trust's portfolio is invested in UK investment investment trusts, which are facing the widest discounts since the depths of the Global Financial Crisis.

According to the Association of Investment Companies, the average discount across all investment trust sectors stood at 16.9% at the end of October, the widest discount for a month-end since December 2008, when it reached 17.7%, according to data from Morningstar.

In its annual results released today (10 November), the managers said they are excited about opportunities in the sector where they can add value as an "engaged and active shareholder".

Failed continuation vote leaves Hipgnosis Songs manager in a 'do or die' position

AVI Global has upped its stakes in UK investment trusts in light of the significant discounts, building new positions in Pantheon International and Princess Private Equity over the last year, while also "meaningfully adding to what was a small tail position" in Hipgnosis Songs fund.

This is was in addition to its existing holdings in other investment trusts such as Oakley Capital Investments, Third Point Investors, Pershing Square Holdings, Molten Ventures, JPEL Private Equity and Seraphim Space Investment.

Last month, Asset Value Investors began a campaign against the management of Hipgnosis, urging fellow shareholders to vote against the continuation of the company and the proposed $465m music catalogue sale, which ultimately failed.

"We urge undecided shareholders not to be swayed by a misleading narrative that a failure to pass the continuation resolution results in a wind up of the company or a fire sale of assets," wrote AVI executive director Tom Treanor in a letter to shareholders.

Nick Greenwood joins Asset Value Investors to continue managing MIGO Opportunities trust

In May, the firm also attacked SK Karen due to its poor performance, with Joe Bauernfreund, CEO of AVI, arguing it had a "lack of urgency and weak management discipline".

In the year to 30 September, AVI Global Trust's NAV and share price rose 15.1% and 14.8%, respectively, compared to a 10.5% return from the MSCI AC World index, according to the results.

Despite the strong performance, the trust has struggled with the introduction of Consumer Duty, which would see online platforms potentially include the underlying charges of any funds held in AVI's portfolio of investments in their assessment of the costs of investing in AVI Global.

In a research note, Numis analysts Ash Nandi, Gavin Trodd and Ewan Lovett-Turner said that a headline to demand for VI Global recently is likely to have been cost disclosures, which under the KID are required to include underlying fund costs.

However, the analysts noted that trust is actively in discussions with the Treasury and the regulator over the issue, and agreed with the board that this was "inappropriate disclosure".

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