charles cadeOn discounts

Over the past couple of years, a growing number of investment trusts have announced commitments to p...

Over the past couple of years, a growing number of investment trusts have announced commitments to protect a specified level of discount by using share buyback powers. In some cases, this is a defensive measure in order to stave off the threat of corporate activity, although it is increasingly common for funds seeking to raise new capital to introduce a discount target to reassure investors that the downside to the discount is limited. We estimate that around 40 funds now have an explicit discount target, ranging from 3% to 12%. However, this may not always be in the best interests of th...