MIGO OPPORTUNITIES TRUST PLC Miton Global Opportunities plc ("the Company") has today released its Half-Yearly Report for the six months ended 31 October 2015.
The Company's name has been changed to more accurately reflect the investment approach, which seeks principally to exploit pricing inefficiencies in closed-end investment funds.
The Company has been reclassified into the AIC's new Flexible Investment sector, being companies "whose policy allows them to invest in a range of asset types".
Shareholders have approved new provisions within the Articles to enable shareholders to elect, in 2018 and then at three year intervals, for the realisation of all or part of their shareholding.
Investment Manager believes that the current environment increases the potential for pricing inefficiencies and provides a number of interesting opportunities. Despite maintaining a cautious view about the general direction of equity markets, the Company is fully invested.
The Half-Yearly Report and other information is available via www.mitongroup.com/migo.
Miton Group plc David Barron
DDI: +44 (0) 203 714 1474
Email: david.barron@mitongroup.com
Numis Securities Limited
Nathan Brown, Corporate Broking and Advisory DDI: +44 (0) 20 7260 1426
Email: n.brown@numis.com
Miton Global Opportunities plc is an investment trust which was launched on 6 April 2004.
At a General Meeting of the Company held on 9 September 2015, shareholders approved proposals to remove the requirement for future continuation votes in the Company's Articles of Association and instead include provisions enabling shareholders to elect, in 2018 and then at three year intervals, for the realisation of all or part of their shareholding. The Company's share capital therefore comprises Ordinary shares of 1p each with one vote per share and Realisation shares of 1p each, when in issue, with one vote per share.
The rights of holders of Ordinary shares (being shares in respect of which no election for realisation has been made) and of Realisation shares (being shares in respect of which an election for realisation has been made), when in issue, will be as follows: the portfolio will be split into two separate and distinct pools, namely a continuation pool comprising assets attributable to the continuing Ordinary shares (the "Continuation Pool") and a realisation pool comprising the assets attributable to the Realisation shares (the "Realisation Pool"). The assets in the Realisation Pool will be managed in accordance with an orderly realisation programme with the aim of making progressive returns of cash to holders of Realisation shares as soon as practicable. The precise mechanism for any return of cash to holders of
Realisation shares will depend upon the relevant factors prevailing at the time and will be at the discretion of the Board.
As at 31 October 2015 and the date of this report, there were 25,279,985 Ordinary shares in issue, none of which were held in Treasury.
The objective of the Company is to outperform 3 month LIBOR plus 2% over the longer term, principally through exploiting inefficiencies in the pricing of closed-end funds. This objective is intended to reflect the Company's aim of providing a better return to shareholders over the longer term than they would get by merely placing money on deposit.
The benchmark in the investment objective is a target only and should not be treated as a guarantee of performance of the Company or its portfolio.
The Company invests in closed-end investment funds traded on the London Stock Exchange's Main Market, but has the flexibility to invest in investment funds listed or dealt on other recognised stock exchanges, in unlisted closed-end funds (including, but not limited to, funds traded on AIM) and in open-ended investment funds. The funds in which the Company invests may include all types of investment trusts, companies and funds established onshore or offshore. The Company has the flexibility to invest in any class of security issued by investment funds including, without limitation, equity, debt, warrants or other convertible securities. In addition, the Company may invest in other securities, such as non-investment fund debt, if deemed to be appropriate to produce the desired returns to shareholders.
The Company is unrestricted in the number of funds it holds. However, at the time of acquisition, no investment will have an aggregated value totalling more than 15% of the gross assets of the Company. Furthermore, the Company will not invest more than 10%, in aggregate, of the value of its gross assets at the time of acquisition in other listed closed-end investment funds, although this restriction does not apply to investments in any such funds which themselves have stated investment policies to invest no more than 15% of their gross assets in other listed closed-end investment funds. In addition, the Company will not invest more than 25%, in aggregate, of the value of its gross assets at the time of acquisition in open-ended funds.
There are no prescriptive limits on allocation of assets in terms of asset class or geography, save that no more than 80% of the Company's gross assets can be held in any one geographical region.
There are no limits imposed on the size of hedging contracts, save that their aggregated value will not exceed 20% of the portfolio's gross assets at the time they are entered into.
The Board permits borrowings of up to 20% of the Company's net asset value (measured at the time new borrowings are incurred).
The Company's investment objective may lead, on occasions, to a significant amount of cash or near cash being held.
Over the period, the Company's net asset value decreased by 4.37% and the share price decreased by 2.76% (capital return).
During the period, the shares traded between a 6.01% and an 11.55% discount, ending the period on an 8.89% discount (source: Bloomberg).
As at 31 October 2015, the Company had short-term borrowings of £5,000,000.
FINANCIAL HIGHLIGHTS31 October 2015 | 30 April 2015 | |
Net asset value per Ordinary share (including revenue reserves) | 173.70p | 181.63p |
Net asset value per Ordinary share (excluding all revenue reserves) | 175.07p | 182.25p |
Share price | 158.25p | 162.75p |
Discount to net asset value | 8.89% | 10.40% |
Total net assets (after deduction of borrowings) | £43.91m | £45.92m |
Total borrowings | £5.00m | £3.00m |
Ongoing charges | 1.32% | 1.16% |
6 months % | 1 year % | Since launch % | |
Net asset value* | (4.4) | 2.3 | 78.5 |
Share price ** | (2.8) | 4.8 | 58.3 |
MSCI World Index in Sterling** | (3.6) | 5.4 | 137.8 |
FTSE All-Share Index** | (5.7) | 3.0 | 132.7 |
Sterling 3 month LIBOR +2%*** | 1.3 | 2.6 | 68.3 |
Sources:
* Based on initial NAV of 97.33p (after launch expenses).
** Bloomberg. Net income reinvested GBP.
*** Miton Asset Management Limited (Sterling 3 month LIBOR +2% at the beginning of the accounting period).
In accordance with the Articles of Association, a continuation vote was put to shareholders at the Annual General Meeting of the Company held on 9 September 2015 and approved. Over 67% of shareholders voted on this resolution, with 99% voting in favour.
A General Meeting was held on the same date, at which proposals were approved to amend the Articles of Association. The changes removed the requirement for future continuation votes and instead shareholders will be offered the opportunity to elect to exit the Company at three year intervals, through the conversion of all or part of their holding of Ordinary shares into Realisation shares.
As a result of the changes to the Articles, the management and performance fees payable by the Company to the Manager have also been amended to reflect new fee arrangements that would apply in respect of the share reorganisation that would take place on the issue of Realisation shares. As this was a related party transaction, a resolution was put to, and approved by, shareholders at the General Meeting on 9 September 2015. Details of the fee changes are set out in Note 9 below.
The Directors believe that the Company's name should be simplified and more accurately reflect the investment approach. Accordingly, with effect from 5 January 2016, the name of the Company was changed from Miton Worldwide Growth Investment Trust PLC to Miton Global Opportunities plc. A change of name is permitted by the Company's Articles of Association and does not require a shareholder vote. The Company's ticker has changed to MIGO.
AIC SECTORWith effect from January 2016, the AIC has introduced a new sector classification: Flexible Investment. The definition for this sector is "Companies whose policy allows them to invest in a range of asset types". Miton Global Opportunities is one of the companies that has been reclassified into this new sector.
The period under review was a tough period for equity markets. During the summer, the major indices fell to levels around 15% below where they had reached in early April, most of the damage coming in August. The Company's net asset value declined from 181.63p to 173.70p, a fall of 4.37%. This incorporates the costs associated with the changes to our capital structure which were approved by shareholders at our Annual General Meeting in September, which amounted to 0.46p per Ordinary share. In response, our discount narrowed modestly as our share price declined by 2.76%. During the corresponding period, the FTSE 100 Index fell 8.61% whilst the MSCI World (Sterling) Index drifted 4.78% lower.
The very high level of leverage which exists in many corners of the financial system leaves markets vulnerable to sudden sell offs. These will have no obvious cause other than a collective loss of nerve. This was certainly the case in August when the catalyst appeared to be a change of heart by the Federal Reserve over an expected increase in interest rates. Similar rapid declines are more than likely in the future. Therefore relatively little mainstream equity exposure is retained within our portfolio.
The market in smaller closed ended funds has suffered from a further decline in liquidity in recent months. This has been an unintended side effect of proposed regulatory change. Such an environment increases the potential for pricing inefficiencies to develop and provides a number of interesting opportunities for us to exploit. Despite maintaining a cautious view about the general direction of equity markets, we are fully invested.
Notwithstanding central banks retaining highly accommodative monetary policies, notably in Europe and Japan, the global economy continues to be sluggish and earnings growth remains unspectacular. Emerging markets were harshly treated as investors fretted over China's slowdown and change of emphasis away from industry towards a service-based economy. Whilst there are real challenges for equity markets in countries such as Brazil, Turkey, Russia and of course China, there seemed to be no account taken of the significantly varying fundamentals which exist in countries labelled "Emerging". These all sold off together. Our exposure to this area comes via The Establishment Investment Trust, which is largely an Asian focused fund, Pacific Horizon, which is a play on disruptive technologies within Asia, and India Capital Growth. Establishment's share price fell nearly 10% during the summer but held up better than many of the local indices and its peer group. India Capital Growth actually made a modest gain, a sterling achievement in the circumstances. On the other hand, Pacific Horizon fell sharply in line with the global technology sector.
"Alternatives" is a term which encompasses a wide range of asset classes from solar farms to infrastructure projects and distressed debt. These markets are far less liquid than equities and managers of these assets require the protection from inflows and outflows that is provided by the closed ended structure. It is likely that as time progresses "Alternatives" will represent a much greater proportion of the sector. This creates an opportunity given that valuing these assets is not as straightforward as in the case of a traditional equity investment trust. This creates scope for anomalies to develop between the stated net asset value and what we believe the portfolio could be sold for in the open market. Within our portfolio, there are three areas where we believe disposable values are greater than stated ones. These are: private equity, residential property in Berlin and second-hand traded life policies. In the case of private equity, the industry has raised substantial sums which now need to find a home. A mature portfolio owned by a private equity investment trust is in the sweet spot of a sellers' market. Our two Berlin specialist funds are in the process of splitting up the apartment blocks within their portfolio and selling individual flats as leasehold. The rental market in Germany is highly regulated, which depresses the value of tenanted property. Once "privatised", these flats command around double the value they previously justified as a rented property. The stated net asset value of these funds is arrived at by valuing assets as for rental occupation rather than privately owned.
Miton Worldwide Growth Investment Trust plc issued this content on 2016-01-07 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 2016-01-22 11:54:08 UTC
Original Document: http://www.mitongroup.com/downloads/mwgt/2016/MIGO HY Report 2015.pdf
