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Fund of hedge funds discount to NAV narrows from 30% to 10%

Brevan Howard’s FTSE 250-listed fund of hedge funds BH global has reported that its discount to net asset value has narrowed from 30 per cent to 10 per cent at the end of last year.

BH global invests in a range of asset classes, strategies and regions though five Brevan Howard hedge funds using a feeder fund structure.

The fund was launched in May 2008 and had produced a positive return of almost 4 per cent by the end of the year but its share price suffered in December last year as panic set in among investors who had lost confidence in hedge funds.

Indiscriminate selling and a loss of liquidity took their toll but BH global directors felt that share buybacks would not have much of an impact at that time.

Market conditions started to improve this year, prompting BH global’s directors to manage the discount.

Proposals were made to shareholders for a partial return of capital each year and by March 19, £5.4m in share buybacks made under the fund’s existing policy helped to reduce the discount back to 10 per cent.

BH Global chairman Lord Turnbull says: “The board remains confident that underlying funds are capable of delivering consistent and non-correlated gains in net asset value.”

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