Short positions... an ill-timed Russian trade

⬛ Stewart Investors, managers of the £48m ScotGems trust, bought a Russian company on the day of its invasion of Ukraine, says Investment Week. Prior to the purchase of the position in a London-listed Russian retailer it had no direct investments in Russian companies due to corporate governance concerns. A results statement from ScotGems released on 11 March said the board was “surprised with such a decision being made” and even more surprised that First Sentier Investors, which owns Stewart Investors, had “permitted such a trading instruction to be processed, in the prevailing circumstances”. The investment is now held at nil value given that trading in all London-listed Russian companies has been suspended. The news came two days after Scotgems announced that First Sentier Investors had resigned as managers of the portfolio but that it will continue to manage the trust until “alternative arrangements have been made”.

⬛ Open-ended property funds have been hit by two industry-wide trading suspensions and “hefty” investor withdrawals in recent years, notes David Baxter in Investors’ Chronicle. However, the closed-end versions of such trusts – particularly “generalist” commercial property trusts, which have struggled as investors favour “promising subsectors” – are trading on substantial discounts to net asset value (NAV – the underlying portfolio) and are worth a look. The likes of BMO Commercial Property (LSE: BCPT), on a discount of 8%, and Schroder Real Estate (LSE: SREI), on a 20% discount, have decent exposure to the growing industrials sector, for example, and more generally, property is still an attractive inflation hedge. The uncertainty looks priced in – now may be a good time to buy.