The board of abrdn’s £360 million Diversified Income and Growth investment trust have initiated a strategic review of the company in an effort to tackle its persistent discount.
The review could result in the company merging with another investment trust, according to an announcement from the trust’s board this morning, although board chair Davina Walter emphasised that the directors were considering “all options”.
The Abrdn Diversified Income and Growth trust – which trades under the stock market ticker ADIG – has performed well against its benchmark since implementing a new investment strategy, the board said.
Since August 2020, manager Nalaka De Silva has been shifting the portfolio to invest a greater proportion into private markets while also simplifying its asset allocation approach.
However, despite improved performance, the trust’s share price has remained at a significant discount to its net asset value. The discount had reached 25.8% as of 19 June, according to the Association of Investment Companies.
Walter stated: “While the board is encouraged by the management of the company’s portfolio, the company’s shares continue to trade at a persistently deep discount to net asset value. It is the board’s view that a strategic review of the company is required to consider how we can best optimise value for shareholders.
“As part of this exercise, we will consider all options, including, but not limited to, a combination with an existing investment trust. Our focus will now be on seeking feedback from shareholders, commencing productive discussions with relevant parties and updating the market on the outcome of the review in due course.”
In the three years to 19 June, the Abrdn Diversified Income and Growth trust’s net asset value increased by 20.3%, but its share price has only risen by 7% in the same period. Its portfolio was valued at just under £360 million, but its market capitalisation was just £255 million.
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