I attended the City of London Investment Group (CLIG) Annual General Meeting this morning – not of course to be confused with other City of London companies. CLIG is primarily an investment company that invests in Closed End funds/trusts via a very specific process. It encourages such trusts to close any discount to NAV. Historically it has had a strong focus on emerging markets funds but has been diversifying into other markets and into REITS more recently.
Barry Oliff was the founder and has acted as investment manager until recently but he is retiring in December. He plans to dispose of some shares but he has pre-announced the number he would sell and at what price. He has set an example of open disclosure at the company and they provide voluminous information on Funds Under Management (FUM) and likely future profits. They also make the investment process used absolutely clear which is of some importance if you wish to be able to trust a fund manager.
The company also publishes a Statement on Corporate Governance and Proxy Voting Policy for closed end funds which is very well worth reading by all investors in funds and trusts. I could not immediately find it on their web site but no doubt they would supply if you ask for a copy.
The company traditionally pays a high dividend, currently over 6% yield, which attracts some investors.
There were about a dozen investors at the AGM which is typical at this company, and there were a number of intelligent questions. All resolutions were passed on a show of hands votes and unusually I supported all of them. However, as is common at this company there were substantial proxy votes against one resolution from proxy advisors. It seems they were unhappy with the last resolution on revised Articles which removed the reference to a cap on director fees. The directors are to engage with shareholders with a view to reintroducing that.
In the past they often got substantial votes against remuneration resolutions as the scheme is somewhat unusual, but not this time. Indeed Mark Bentley of ShareSoc complimented the board on an “excellent scheme”.
One question was why pay a special dividend rather than diversify and create new funds? The answer was they have done so but there are limits to how much can be raised and invested by new funds – it takes time to do so.
On grounds of brevity and time, I won’t cover the other questions as they were not of great significance. In essence there seem to be no great concerns at present and the business has a clear development path, although there are perhaps slight concerns about downwards trends in fund management fees that can be charged. This is a general trend it seems but the Chairman indicated that there is potential to treble the funds under management which would offset that trend of course.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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