Listed hedge fund sector to shrink as discounts widen

The listed hedge fund sector looks set to contract as trusts face continuation votes and many are wound up, despite taking action to narrow their discounts.

All but one of the 32 listed hedge funds has had to take measures to narrow its discount since April 2009. Last year listed hedge funds spent £318m buying back shares, and £1.7bn returning capital to shareholders in other ways, according to listed fund promoter Dexion Capital. Of the trusts that saw their discount control mechanisms triggered, several faced a continuation vote. Some funds are now facing their second vote as the managers have been unable to address their discount to NAV. Mark James, head of sales and research in Royal Bank of Scotland’s global banking and markets te...