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F&C rethinks buyback policy

The F&C investment trust has announced a new buyback policy to keep its discount at 10 per cent or lower.

The board has been concer-ned about the size and volatility of the trust’s discount to NAV. The aim is to reduce discount volatility, making shares more attractive to potential shareholders and giving reassurance to current shareholders.

Such policies are becoming increasingly common among investment trusts to protect them from arbitrageurs.

F&C’s move follows similar actions by Gartmore global and Witan and analysts are pressuring other investment trusts into considering their positions on share buybacks.

This is the third major change to the F&C investment trust this year, with the firm already outsourcing management of a proportion of its US and Japanese assets and introducing a new performance fee structure. The trust is managed by Jeremy Tigue and is currently trading at a discount of 11.7 per cent.

A spokesman for investment analyst Cazenove says: “This move throws down the gauntlet to other global growth trusts trading on wide discounts. All boards should be asking themselves why shareholders have to put up with wide discounts.”


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