An investment trust which sought to follow the philosophy of stock-picking guru Warren Buffett has been axed following a lack of demand from savers.
The Buffettology Smaller Companies Investment Trust was set to be managed by Keith Ashworth-Lord, a British fund chief who models his strategy on the principles that have allowed billionaire Mr Buffett deliver average annual returns of 20pc over the past 55 years.
Mr Ashworth-Lord uses the Sage of Omaha's name under licence but is a well-regarded investor in his own right, making strong returns for investors in his £1.4bn SDL UK Buffettology fund for many years.
He had hoped to raise £100m from investors and take advantage of a chance to snap up smaller UK firms on the cheap after stock prices were hammered by Covid and Brexit. But the trust fell short of its proposed raising despite attracting what it said was substantial interest.
Mr Ashworth-Lord said: "I put it down to the renewed campaign to lock down the country and more government bungling over its communications.
"Quite simply, they have sacrificed the economy again at just the wrong time and turned up the risk-off dial in investors’ brains."
The manager said that “fear stalks the land” but that investors should be greedy.
Mr Ashworth-Lord said he intends to invest aggressively through his SDL UK Buffettology fund over coming weeks to take advantage of opportunities in the market.
He added: “We have done an awful lot of preparation work in advance of launching the trust and the funds will now be the prime beneficiaries of our efforts."
It is the second investment trust unable to raise enough cash to get off the ground, after Tellworth British Recovery & Growth failed to meet a £75m minimum target earlier this month.
Blue-blooded firm Schroders is also aiming to enter the market with the new Schroder British Opportunities Trust (SBO), which is seeking £250m. The company said it remains committed to a float.
Launching a British investment trust in the current climate was always likely to be a difficult task. Existing trusts investing in small UK companies are cheap – shares are on a 10pc discount to the value of their underlying holdings – so buying into a new trust at full value was less appealing to investors.
Laith Khalaf, of fund shop AJ Bell, said the Buffett name and the excellent track record Mr Ashworth-Lord were not enough to get the trust off the ground.
He said that investors who want exposure to smaller companies could also consider the Standard Life UK Smaller Companies trust, which is trading on an 8pc discount, or buy into the existing Sanford De Land UK Buffettology fund.