Investors in the £2.2bn Witan investment trust will receive five new shares in exchange for the one they currently own as the board aims to make the shares more accessible to smaller investors.
The plan, revealed in the annual results statement of the trust out this morning (March 12), is being carried out to make the shares cheaper and therefore more accessible to smaller investors.
The overall value of the holdings of existing investors will not change as a result.
Harry Henderson, chairman of the trust, said: "The intention is to make Witan's shares more accessible, particularly for those making regular savings or reinvesting dividends, where the approximately £10 share price in recent years may not be an ideal unit size to deal in.
"Furthermore, the previous position of one vote per four shares held was anomalous."
Mr Henderson is soon to retire as chairman of the trust.
Witan is a global investment trust that invests via placing investors' capital in other funds. The trust lost 6.3 per cent in performance terms in 2018, worse than the benchmark loss of 6.5 per cent when considering the effect of gearing.
Investment returns were actually 0.2 per cent better than the benchmark but fees and the cost of gearing, which was 0.4 per cent, meant the trust returned a worse outcome than the benchmark.
Gearing is the practice of investment trusts borrowing and investing the money.
If the investments made with the borrowed money deliver a return better that is higher than the cost of the debt, then the investor benefits.
In Witan’s case, the debt costs were higher than the investment return achieved with the money, so investors lost out.
The market where the trust delivered the best returns during the year was the US, while investments in Europe and the UK were negative performers.
david.thorpe@ft.com
