Interactive Investor

Fund manager of ‘dividend hero’ investment trust to retire

The lead manager of one of the nine ‘dividend hero’ trusts that have raised income payouts for at least half a century will retire next June.

18th December 2023 10:36

by Kyle Caldwell from interactive investor

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Peter Ewins, lead fund manager of The Global Smaller Companies Trust (LSE:GSCT) since 2005, will retire from fund management next June.

The smaller companies-focused portfolio, which is one of nine dividend hero trusts that have raised income payouts for at least half a century, will be taken over by Nish Patel, who has worked with Ewins for more than 15 years. Patel will become co-fund manager from 1 January 2024, and then take over as lead fund manager from 1 May 2024.

The Global Smaller Companies Trust has a small dividend yield of 1.6%, but has delivered strong income growth over the years, with its dividend increasing for 53 years in a row.

The other trusts in the group of investment trusts with at least half a century of consecutive dividend increases are: City of London (LSE:CTY), Bankers (LSE:BNKR), Alliance Trust (LSE:ATST), Murray Income Trust (LSE:MUT)Caledonia Investments (LSE:CLDN)F&C Investment Trust (LSE:FCIT), Brunner (LSE:BUT), and JPMorgan Claverhouse (LSE:JCH).

Ewins was a guest on a recent On The Money podcast in which he talked about why rising interest rates have been a headwind for smaller companies, and explained where he thinks the best value opportunities are globally and in the UK.  

In the trust's half-year results (published 15 December 2023), in which Ewins’ retirement was communicated, it was announced that its interim dividend will rise by 7.9% to 0.68p per share.

During the six months to 31 October, Global Smaller Companies underperformed its benchmark in share price and net asset value (NAV) terms. Its share price declined by 8.6% and the NAV lost 6.3% versus a fall of 3.6% for its benchmark, which is 20% against the Numis UK Smaller Companies (ex Investment Companies) Index and 80% against the MSCI All Country World (ex UK) Small Cap Index.

Providing an outlook for the months ahead, Ewins said smaller company performance is “likely to remain highly sensitive to perceptions around the path of interest rates”.

He added: “As usual, the investment team continues to monitor the near and medium-term outlooks for the existing portfolio, while at the same time looking for opportunities to take advantage of lower valuations in the wider markets.”

In 2023, a flurry of veteran fund managers have announced plans to call it a day. Over the past couple of months, abrdn’s Hugh Young, Bruce Stout of Murray International (LSE:MYI), James de Uphaugh of Edinburgh Investment (LSE:EDIN), and John Bennett, who oversees several European funds for Janus Henderson, have said they plan to retire from running money.

Their announcements followed news from UK equity fund manager Richard Buxton, who said in June that he would be retiring.

Over the past couple of years, high-profile retirements include Walter Price of Allianz Technology Trust (LSE:ATT), abrdn’s Harry Nimmo, and James Anderson, longstanding fund manager of Scottish Mortgage (LSE:SMT).

History shows that a change in a fund or trust’s lead manager can have a big impact, and that it can be for better or worse, so investors should always take note.

When it comes to fund manager retirements, there are two main things to consider: is the new fund manager going to stick to the current process, and has the handover process been smooth?

In terms of the handover process, consider how long succession planning has been in place.

The main difference between a retirement and a fund manager exit is that the fund firm will generally have more time to prepare for a retirement.  

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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