Instead, it proposed a change in strategy and manager, with the new mandate to be a sustainable global equity income fund run by BMO Global Asset Management, ‘investing principally in a global portfolio of publicly listed companies that offer an attractive level of income and make a positive impact on society and the environment’.
#ACORN INVESTING UPDATE#
In an update to the market in May 2021, AIF’s board said the strategic review had led to the conclusion that ‘the current arrangements will not deliver a product with wide appeal to investors and that maintaining the status quo will leave facing the same problems of scale and liquidity that have challenged it in recent years’. Source: Refinitiv, Edison Investment Research While the landslide Conservative election victory and the agreement of trade terms with the EU at the end of 2019 appeared to herald a more positive period for UK companies, the onset of the COVID-19 pandemic in early 2020 caused a severe shock in financial markets, with AIF’s portfolio selling off by more than its comparator index (Exhibit 2), compounded by a hit to its income as many companies cut or suspended dividend payments. Shareholders had overwhelmingly backed continuation at the previous vote in 2016, but the period following the referendum on European Union membership had seen UK companies (and smaller ones in particular) fall out of favour with investors, leading to a widening discount to NAV for AIF’s shares even though NAV performance remained ahead of the blended benchmark (75% Numis Smaller Companies (excluding investment companies) Index and 25% ICE BofAML Sterling Non-Gilts Index).
In the FY20 annual report, AIF’s board announced that it had initiated a strategic review to determine the next steps for the fund ahead of the five-yearly discontinuation vote scheduled for the August 2021 AGM (since postponed).
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