Why do Investment Trusts trade at a Discount? This article is aimed at focusing the reasons behind the trading of investment trust shares at a discount. At the beginning of this article, investment trusts are explained along with their differences with the investment companies…
Last part of this article would highlight some of the tactics devised in order to control discount trading of investment trust. Summary at the end of this article would conclude this article. Investment Trusts Investment trusts are those types of companies, which are provided the domicile of United Kingdom such that they are listed in the London Stock Exchange. They mainly invest in the equities and securities of the companies across the world, which are listed in different stock exchanges (Redhead, 2008). These investment trusts are run by the panel of the independent directors who take care of the affairs of the investment trusts. Investment trusts are somehow different with the investment companies such that investment companies are domiciled outside the jurisdiction of UK such as Jersey or Guernsey (Redhead, 2008). Pricing of Investment Trusts The pricing of investment trusts are made based on a conceptual term named as Net Asset Value or NAV. Net asset value is the market value of all the investments held by the investment companies. Therefore, the market value of any investment trust is actually the NAV of the investments (Levy and Post, 2005). In case if the market value of the shares issued by the investment trust exceeds NAV, then this concept refers as the shares of the investment trusts are trading at a premium. ...
This means that the shares of the investment trust are trading at discount. Very occasionally, it appears that the investment trust share is trading at a premium. The following discussion entails the factors that cause the investment trust shares trading at a discount. Investment shares trading at a discount can be regarded as one of the integral aspects that operate behind the performance of the investment trust. The measurement of the shares of the investment trusts can be made in two ways. Firstly, the share price of the investment trusts quoted at the stock exchange. Secondly, market value per share of the assets of those companies, which are held by the investment trusts. In this way, discount can be calculated by simply taking the difference between the price per share of investment trusts and net assets value divided by the net assets value. Principally, the discount is regarded as the function of demand and supply mechanism for the shares of the investment trust. However, the discounts, and specifically the fluctuations in discounts are more important and follow some basis rules, which help understand the problem of investment trust shares trading at a discount more consistently. In case if the discount rate increases, this indicates that there are more chances that the discounted shares will be priced higher in future. This suggests that the investment trust shares are quite attractive especially against those investment trust shares, which are currently trading at a premium (Baums and Buxbaum, 1994). However, this mechanism is not as easy and simpler as it appears, had there been such a potential in the discounted investment shares for a possible price increase, the whole market ...
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“Institutional Investments Essay Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.net/finance-accounting/80269-institutional-investments.
I dedicate this dissertation to my parents, brothers and sisters with my deepest love and gratitude. To my wife and kids, I couldn’t have done this without your unfading encouragement and support. I must thank you for being patient. To my best friend, Khalid, thank you for your full support and encouragement.
Acknowledgements The author is especially grateful to (mentor/advisor’s name) for all the patience and guidance displayed for the duration of the this research. Abstract In the aftermath of the breakdown of Communist Europe, a majority of Central and Eastern Europe are currently characterized as transition states as they transition from socialist states to market-based economies (Centeno 1994, 125).
In the United States, the trend is the same: over 60 percent of stocks are controlled by this type of investor (Burton and Brown, pp.223). The OECD also reported that in its member economies, institutional investors are growing on average of 9 percent per year since the 1990s (OECD, 2000, pp.195).
This is a tax-free method of saving which includes government agencies and self-funded schemes among others; they vary as some organizations may have disability pensions among other benefits which are mainly to the advantage of the employer. Introduction Pension can be defined as a contract of an employee for a fixed amount of money that is payable on a regular basis upon retirement from work (Redhead 2003, pg.
Institutional investment is an investment related to organized institutions. Such institutions are caretakers of others’ equities and private holding investments. The role of institutions is deliberate as they set a system of organizing, developing and managing respective funds.
However, overtime, there have been considerable changes in the residential sector in the UK. Increasingly, there is institutional engagement with the residential sector from various fronts. Despite these changes however, there is relatively low response among the concerned parties in the sector.
The review of the two will give an insight to the worthwhile investment that a potential investor can decide to offer his capital. Actively managed funds do have a benchmark that a manager or a team making the decisions look for in the underlying portfolio allocation in order to follow a passive investment strategy as in this case managers would pick on such funds with the sole aim in mind that could be beating a particular index while assuming a set return level and at the same time watching that the risk does not surpass a set level.
Answer: No use of universe of managers can't overcome and the reason behind this is beta (systematic risk and the volatility depend on the market sentiment and use of universe of manager can overcome the internal performance of any company but not the market risk as this risk can be diversified but can't eliminated.
Same sex marriage is a common thing nowadays in many societies. Changing life styles and life philosophies increased the marriages between two women and two men. In a liberalized society such things are common and we cannot blame people for adopting their own living styles and standards.