HgCapital Trust (HGT) is a private-equity trust offering direct exposure to companies in the software and services sectors, typically in northern Europe. Compared to typical equity funds, the trust is highly concentrated: the top 20 companies add up to 88.4% of NAV, with the largest investment at 20.7%. The managers provide active, hands-on management to the companies HGT holds as they undergo rapid development or transformation. The sector focus and higher-growth companies that HGT invests in mean that it is differentiated relative to most of the listed private equity (LPE) sector. The trust is also unique in that it is the only one in the sector that has been recently able to issue shares at a premium to NAV. HGT’s long-term track record is very impressive, as is its record over the short term. Over the past five years HGT has delivered a compound annual NAV return of c. 17% p.a. (to 31/03/2020), significantly ahead of the FTSE All-Share return over the same period of 0.6% p.a. As anyone who has invested in listed private equity in the past knows, these returns do not come without risk (to valuations or discount).
