Shaking up the market

investment trusts

Although arbitrageurs' activities can deprive investors of the opportunity to buy assets at a discount they are also causing investment trust boards to become more responsive in the face of poor performance

For many years a large part of the investment trust world seemed to be locked in a timewarp while the rest of the financial services industry was moving forward. Large international trusts lumbered on with scant regard to the changing world and it seemed that managers felt certain their world would not undergo change. But things do change. Investment trusts are now experiencing a number of changes including increased arbitrage activity. Where investment trusts are concerned, arbitrage can be broadly described as a situation in which active investors seek to close the discount of a trust fo...