Investment trust share buybacks fell to a new monthly low of £11.1m in February, down from £17.4m in...
Investment trust share buybacks fell to a new monthly low of £11.1m in February, down from £17.4m in January and less than a third of the sales made in the same month a year earlier, when £35.4m of shares were bought in.
The number of trusts making repurchases fell to 25, down from 31 in January and the lowest since June 2002.
HSBC investment trust analyst Paul Locke said while February was a short month, the buyback figures demonstrate a continuing decline in trusts' use of buyback programmes in order to manage discounts to NAV.
'Whether this also equates to a reduced need on the part of management groups to do so is more questionable, particularly given that the entire trust sector discount remains barely changed from that of a year ago,' he said.
The weighted average discount to NAV in the largest investment trust sector, global growth, was -12.5% on 5 March, compared to -10.6% on 20 March 2002. The weighted average in the UK General sector was -10.7%, compared to -9.0% on 20 March 2002.
Locke said the reduction in buybacks is likely due to either a considerable easing in market pressure for repurchases or an equalisation of supply and demand for trust shares as a result of the amount of repurchasing already carried out.
If market equilibrium has been reached, monthly buybacks will plateau in the medium term, although large repurchases may impact on an otherwise steady monthly total, he said.
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