Abrdn has announced it will reinvest up to six months’ worth of management fees into 17 UK listed closed-ended funds it manages.
This investment is subject to applicable law, regulation and to existing contractual obligations.
However, if approved abrdn predicts that the total amount invested under this initiative will likely exceed £30m.
The investments will be made when relevant management fees are received.
According to the Association of Investment Companies (AIC), discounts across the investment company sector hit a 15-year high, with the average at 16.9% at the end of October 2023.
Discounts did subsequently narrow to 12.3% as of 30 November.
Despite this, abrdn said it “believes in the underlying value of its listed closed-ended funds and is launching this new initiative to further align itself with the underlying shareholders of those funds.”
Some asset managers already reinvest a proportion of management fees back into closed ended funds.
However, abrdn believes by doing this across its full range is “an industry first” which “demonstrates its commitment to the listed closed end fund business.”
Abrdn already has an ongoing commitment to reinvest management fees into its two Tritax funds and is the third largest manager of listed closed end funds in the UK by assets under management (AUM).
Abrdn head of listed funds Christian Pittard said: “We strongly believe in the significant underlying value of our investment trust range.
“This initiative underpins our firm commitment and long-term optimism in both the investment company business and the value of the underlying assets in abrdn’s range.
“We also believe this initiative across the full range is good practice during a time of particular challenge for the UK’s closed end fund sector and builds upon similar practices seen at an individual trust level, both at abrdn and elsewhere.
“While there has been much narrative on potential buying opportunities in the sector, we also want to align ourselves more closely with existing shareholders of the funds we manage.
“This initiative demonstrates our strong advocacy for the integrity of the UK’s listed investment trust sector, with its unique structure and independent boards of directors to represent shareholder interests.”
