The new managers of Neil Woodford’s investment trust have said they are hamstrung by the debt left by their predecessor and have only been able to make three changes to the portfolio – despite owning some questionable stocks.
In the eight months since replacing the disgraced former manager, Schroders’ Ben Wicks and Tim Creed have had to focus on reducing the trust’s debt instead of turning over the poorly performing investments that contributed to Mr Woodford’s dismissal.
The now-named Schroder UK Public Private Trust is 25pc geared and the new managers made a commitment to bring this down before making sweeping changes.
Mr Creed said: “To make new investments we have to sell what we own. But we need to reduce the debt and reinvest in existing companies before adding new ones.
“Anything we sold would have been at a big discount so we have been trying to move the companies we own in the right direction.”
The trust was launched to allow investors to buy small and up and coming businesses in the biotechnology, healthcare and technology space. Mr Woodford raised more than £700m and bought large stakes in nascent companies.
It did not go to plan. Many of the businesses failed to yield the expected returns and concerns around Mr Woodford’s failing Equity Income fund acted as a dark cloud and depressed the share price.