SVM Global has underperformed its FTSE World index benchmark over three- and five-year periods, and underperformed the average fund in its IT Global Growth sector over three, five and 10 years.
Private investor Tom Orchard says he is dissatisfied with the way the vehicle has been run of late.
"This fund's performance seems to be getting worse and worse," he said. "A continuation vote is due this year, and I will vote to wind the trust up and put my money elsewhere."
"The trust has a mish-mash of investments – the only thing the holdings have in common with each other is that they're completely diverse. I can't actually work out what the group strategy is."
"It seems to me if [a prospective holding] is in a far and away place and no one else has heard of it then the manager buys it."
Performance of trust vs sector and index over 10-yrs
Source: Financial Express Analytics
Orchard added: "I suspect SVM Global will be targeted by groups that want to break the trust up as is happening at the moment with SVM Active. The sooner the better as far as I'm concerned."
However, Trustnet user Dennis Elliott is more optimistic on future performance, and says he will stand by his investment in the product come December.
He commented: "The last thing I want is to lose this vehicle from my portfolio with all the diversification it brings in areas I could only dream of as a private investor."
"Over time I believe value will come out and as the underlying portfolio is still on a significant double discount I believe the outlook is bright."
Donald Robertson, manager of SVM Global, defended the investment trust’s underperformance, insisting the results are skewed by heavy losses during the financial crisis.
"If you look at the underperformance, returns in 2008 are the biggest contributor," he said. "When the markets corrected aggressively, our 'defensive' stocks corrected more than we expected and perhaps more than they should have done."
"Since the markets stabilised, the trust has recovered to a certain extent. Performance has been pretty flat and we’ve outperformed so far this year."
"Some investment trusts seldom give shareholders the continuation vote, but we feel it’s their right to decide whether or not the company should stay open. We very much hope we will be able to continue after December’s vote," he added.
Financial Express data shows SVM Global outperformed its sector and benchmark in six calendar years out of a possible 10 between 2001 and 2011, but underperformed every year since 2008. It has outperformed its benchmark by 5.9 per cent so far this year.
Performance of trust vs sector and index over 10-yrs
| Name |
2011 (%) |
2010 (%) |
2009 (%) |
2008 (%) |
2007 (%) |
2006 (%) |
2005 (%) |
2004 (%) |
2003 (%) |
2002 (%) |
2001 (%) |
| SVM Global |
6.8 | 13 | 10.1 | -45 | 11.9 | 19.1 | 44 | 26.3 | 36.6 | -12.5 | -21.4 |
| IT Global Growth |
2 | 21.2 | 31.7 | -30.1 | 3.9 | 14.8 | 32.9 | 16.2 | 27.7 | -22.4 | -11 |
| FTSE World index |
0.9 | 16.3 |
19.6 |
-18.2 | 9.5 | 6.5 | 24.5 |
8.2 | 20.4 |
-26.8 | -13.9 |
Source: Financial Express Analytics
In 2008, only five investment trusts in the IT Global Growth sector lost investors more than SVM Global. However, it is less volatile than the average investment trust in the sector over three, five and 10 years.
"Volatility tends to be quite low as we hold funds rather than high beta positions in individual stocks," Robertson explained.
The manager has a bias towards emerging markets, particularly emerging Europe, which makes up 25.9 per cent of SVM Global’s portfolio.
"There’s a definite positive slant towards emerging markets. We feel the challenging levels of debt in peripheral Europe could spill into the more developed countries," he said.
"Russia is our favourite area at the moment. Not only does it offer very strong growth, but it has very little debt as well."