abrdn has said it is to reinvest the equivalent of six months' management fees in the shares of its UK-listed investment trusts to boost their value.
According to the fund manager, the amount invested will be more than £30m and investments will be made when the management fees are received.
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”.
Broker Stifel said it is an unusual move as the trend has been to move away from investment management groups owning stakes in the trusts they run due to conflicts of interest issues.
“However, in this case, these stakes are expected to be relatively small, at least in the first year, probably less than 0.5% of share capital.”
Stifel added it is also not clear if this is a 'one-off' or something that may be done again in the future.
“It also means that abrdn as the manager will be taking market risk on any future rises/falls in these share prices. abrdn says while there is no formal lock-up, the intention is for the company to hold the shares for a year or more.”
Two trusts where management change is on the way are not included - abrdn Private Equity Opportunity Trust and abrdn China, which is proposing a merger with Fidelity China Special Situations.