Discount fears deter treasury shares take-up

Fifteen months after rules were introduced to allow trusts to trade their own shares, only a small proportion of the industry has chosen to use the new powers as yet

Rules introduced in December 2003 allowing investment trusts to effectively trade their own shares gave them an opportunity to minimise the volatile discounts then thought to be deterring small investors. However, 15 months on, only a small proportion of the industry has adopted treasury shares amid worries from institutional investors that selling on at a discount dilutes existing investors' holdings. At present, only 37 of 230 AITC-member trusts have adopted the powers. Before the changes, trusts were able to buy and cancel shares but this had the disadvantage of reducing liquidity in t...