Smithson Investment Trust to convert fund structure after 'disappointing' year
By Josh White
Date: Monday 02 Feb 2026
(Sharecast News) - Smithson Investment Trust said on Monday that it was on track to seek shareholder approval next month to convert into an open-ended fund structure, after a year in which its net asset value fell and it underperformed its benchmark despite an aggressive buyback programme that helped narrow its share price discount.
In its interim results for the 12 months ended 31 December, the FTSE 250 trust reported net assets of £1.72bn, down from £2.13bn a year earlier, with net asset value per share edging down to 1,601.5p from 1,631.8p.
The shares ended the year at 1,566p, leaving the trust on a 2.2% discount to NAV compared with 9.1% at the end of 2024.
Smithson's NAV total return was -1.8% for 2025, while the share price total return was 5.6%, helped by the tightening discount.
The comparator MSCI World SMID Cap Index returned 10.2% over the same period.
Chairman Mike Balfour said the board was recommending the trust be converted into an open-ended investment company, allowing shareholders to remain invested in the same strategy or exit at close to NAV, with the aim of removing the persistent discount at which the shares had traded.
"The board is recommending that the company be converted into an open-ended investment company, or 'OEIC', which will allow shareholders to participate in the same investment strategy with the same management team, or, should they prefer, realise their investment at close to NAV, thus effectively eliminating the persistent discount at which the shares have traded in recent years," he said.
The proposed restructuring would centre on rolling the trust's assets into Smithson Equity Fund, which would be managed by Fundsmith under the existing investment approach.
Balfour said the board concluded the scheme offered the most flexible outcome.
"The scheme therefore offers shareholders the opportunity to rollover into the new Smithson Equity Fund which will follow the company's current investment strategy and be managed by Fundsmith," he said.
"With the OEIC structure, shareholders will be able to buy and sell at net asset value daily.
"Shareholders who prefer to realise their investment can elect for the cash exit option and effectively sell at a level that no longer has a discount attached."
Smithson said the board started exploring options after the shares continued to trade at a "significant discount" through 2025 despite extensive repurchases.
The trust bought back 23.1 million shares during the year, taking total repurchases since April 2022 to 69.7 million shares, or almost 40% of the share count before the programme started.
It said the discount averaged 10.3% in 2025 up to 11 November, the day before the restructuring announcement, and had averaged 3.2% since the buybacks were halted.
For the year, the trust recorded a total loss after tax of £62.8m, comprising a capital loss of £67.4m and revenue profit of £4.6m.
It also disclosed an interim dividend of 2.1p per share for the 18-month period to 30 June 2026, announced on 13 January and due to be paid on 20 February to shareholders on the register on 23 January.
The company said it had changed its accounting reference date to 30 June in light of the proposed restructuring and prepared the interim financial statements on a liquidation basis, reflecting the expectation that the company would enter voluntary liquidation if the scheme was approved.
The investment manager, Simon Barnard, said the portfolio lagged the benchmark in the second half of the year amid a market environment that rewarded lower-quality and loss-making stocks, while pockets of enthusiasm around AI-linked names drove index returns.
"It was extremely disappointing to observe the NAV drifting for six months while the Index shot off like a rocket, causing NAV performance to fall behind the Index since inception," he said, adding that the trust's share price rose because of the reduced discount following the restructuring proposal.
He said the manager continued to prioritise quality and valuation discipline.
"Our simple investment strategy, of buying good companies, not overpaying and holding for as long as possible to allow our investments to compound in value, has not changed."
Two shareholder meetings were scheduled for 10 February and 27 February to approve and implement the scheme.
The chairman said that if the resolutions were approved, all directors would stand down on 27 February and a liquidator would be appointed.
At 1154 GMT, shares in Smithson Investment Trust were down 0.66% at 1,492.13p.
Reporting by Josh White for Sharecast.com.
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