Nigel Moore, a senior wealth manager at wealth manager Pilling & Co, did not expect Invesco Asia’s discount to narrow from here – in spite of its board’s best efforts.
‘The trust’s long-term performance has been impressive yet recently it has consistently traded at or around a 10% discount to NAV. It is understandable that investors would use the tender to exit at a price closer to NAV.
‘Savvy investors who support the strategy can then recycle back into the shares at the discount which I do not expect to narrow from here,’ he added.
Shrinking the trust could also hurt it in the long term, Moore said. This is because new European regulation called Mifid II will force private banks, wealth managers and financial advisers to pay a dedicated fee for the research they receive from investment banks. This was previously bundled together with trading fees and many expect that it will mean that research coverage ceases on smaller companies and investment trusts that are less mainstream.