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Investment Trust Buybacks Accelerate

Investment Trust Buybacks Accelerate

Trade in Soda;

Many of my recent recommendations in Soda have focused more on the discount to net asset value than the portfolio itself. Assuming the assets acquired are credible and diversified, the opportunity to purchase them at a price below their fair value is an opportunity too good to miss. Currently, the London market provides rich pickings.

Not only can investors buy these discounted investment trusts, but the trusts themselves are buying back their own shares. Buyback programmes make a great deal of sense when the assets trade below their intrinsic value.

A simple example: if a trust had a million shares worth 100p each based on liquid assets held, and the market price is 50p per share, investors hold 100p per share of value that can be traded for 50p per share. If the company could buy back 500,000 shares at 80p each, costing £400,000, the remaining investors would now hold £600,000 of assets worth £1.20 per share. The scale of buying in the market would inevitably close the discount, and the shares might now trade at (say) 100p per share as they become scarcer. Win-win.

Buybacks are a powerful tool for realising shareholder value.

The Multi-Asset Investor is issued by ByteTree Asset Management Ltd, an appointed representative of Strata Global which is authorised and regulated by the Financial Conduct Authority. ByteTree Asset Management is a wholly owned subsidiary of CryptoComposite Ltd.


General - Your capital is at risk when you invest, never risk more than you can afford to lose. Past performance and forecasts are not reliable indicators of future results. Bid/offer spreads, commissions, fees and other charges can reduce returns from investments. There is no guarantee dividends will be paid. Overseas shares - Some recommendations may be denominated in a currency other than sterling. The return from these may increase or decrease as a result of currency fluctuations. Any dividends will be taxed at source in the country of issue.


Funds - Fund performance relies on the performance of the underlying investments, and there is counterparty default risk which could result in a loss not represented by the underlying investment. Exchange Traded Funds (ETFs) with derivative exposure (leveraged or inverted ETFs) are highly speculative and are not suitable for risk-averse investors.


Bonds - Investing in bonds carries interest rate risk. A bondholder has committed to receiving a fixed rate of return for a fixed period. If the market interest rate rises from the date of the bond's purchase, the bond's price will fall. There is also the risk that the bond issuer could default on their obligations to pay interest as scheduled, or to repay capital at the maturity of the bond.


Taxation - Profits from investments, and any profits from converting cryptocurrency back into fiat currency is subject to capital gains tax. Tax treatment depends on individual circumstances and may be subject to change.


Investment Director: Charlie Morris. Editors or contributors may have an interest in recommendations. Information and opinions expressed do not necessarily reflect the views of other editors/contributors of CryptoComposite Ltd. ByteTree Asset Management (FRN 933150) is an Appointed Representative of Strata Global Ltd (FRN 563834), which is regulated by the Financial Conduct Authority.


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