Lazard World Trust Fund (LON:WTR) (formerly The World Trust Fund) seeks capital growth by investing globally in closed-end funds and holding companies that are trading at a discount to the value of their assets. Part of its approach involves working with portfolio holdings to unlock this value, and recent moves by the fund show it is prepared to practise what it preaches.
So far in FY17, WTR has changed its name to link it more explicitly with its manager since launch in 1991; adopted a new benchmark that better reflects the make-up of the portfolio; announced a tender offer for up to 10% of shares at 98% of NAV minus costs; and proposed a new dividend policy, whereby investors will receive a distribution of 3.5% of the year-end NAV.
Strong recent NAV performance has propelled the fund close to the top of its peer group over one, three and five years.
Investment strategy: Seeking catalysts for re-rating
Lazard’s Discounted Assets Strategies team, led by Kun Deng, follows a disciplined process to identify and assess funds and holding companies that are trading at attractive and unwarranted discounts to the value of their assets.
Fundamental to the approach is finding (or working with companies to create) a catalyst for re-rating. Portfolio construction is risk-aware, combining an assessment of downside potential with a focus on appropriate diversification. Short positions may be used for hedging.
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