Pacific Assets (PAC), the £473m investment trust hit by the exit of its Stewart Investors management team last year, is to merge with Schroder Asian Total Return (ATR), offering shareholders a 25% cash exit at a 2% discount.
The decision of Sydney-based First Sentier to close its Edinburgh subsidiary following the departure in August of David Gait, PAC’s former lead manager, and two colleagues, angered the board which began a strategic review in November.
Announcing the conclusion of that process today, chair Andrew Impey said the board and its adviser Investec had received a large number of high quality proposals, including one from FSSA Investment Managers, First Sentier’s other fund management arm which temporarily took over responsibility for the portfolio although it was barred from making major changes during the review.
Explaining the decision, Impey said: “Schroder Asian Total Return has an impressive record of attractive total returns from a differentiated investment strategy and a track record of strong discount management. We have every confidence that the enlarged company will be a leading Asian equities investment company for existing and future investors.”
The elimination of PAC will reduce the number of trusts in the AIC Asia Pacific sector to three from four. Assuming the 25% cash exit is taken up, it should enlarge ATR’s net assets to £1.1bn, putting it level with stablemate Schroder AsiaPacific (SDP) and ahead of Baillie Gifford’s Pacific Horizon (PHI) which has £956m.
Under Schroders fund managers Robin Parbrook and King Fuei Lee, the £624m ATR has generated total underlying investment returns of 57.2%, 22.1%, 10.9% and 15% over one, three, five and 10 years. This beat the annualised sterling returns of the MSCI AC Asia Pacific ex Japan index of 51%, 21%, 8.7% and 11.8% over the same time periods, PAC said.
Impey said PAC shareholders who rolled into ATR should get an “immediate uplift” as the latter traded on a narrower average three-month discount to net asset value.
As an insurance against ATR’s performance faltering, the company will put forward a 15% performance-related tender offer to shareholders if its growth in net asset value fails to beat the MSCI benchmark over the five years to 31 December 2030.
Schroders will contribute to the costs of the merger and has agreed a cut in fees to ensure ATR’s annual ongoing charges drop to 0.65% from 0.8%, a big saving for PAC shareholders who had paid 1.1%. In line with current good practice, the tiered annual management fee, which includes a new 0.5% rate for assets over £500m, will apply to the lower of NAV or share price, meaning shareholders pay less if the trust stands on a discount.
ATR chair Sarah MacAulay said: “The proposed combination will provide shareholders with the scale and liquidity that is increasingly desired in the investment trust industry. The board believes that the proposed combination is compelling for Pacific Assets, Schroder Asian Total Return and prospective shareholders and will position Schroder Asian Total Return for future growth as the pre-eminent Asia Pacific investment company.”
Source: https://quoteddata.com/2026/06/pacific-assets-to-merge-with-schroder-asian-total-return/