James Carthew: The only India trust bucking the downward trend
India Capital Growth has made positive returns whilst all its peers sank over the past year, yet is trading on too wide of a discount.
Not that long ago, India was the place to be for investors. But after a strong run, its equity markets started to look overvalued and then it became much harder to make progress.
This year, Indian stocks have been knocked by the Iran war. Just one India-focused trust has bucked the trend, with positive NAV and share price performance over the past 12 months – India Capital Growth (IGC).
IGC is the smallest of the four Indian trusts, with a market cap of just £114m. That reflects the buybacks that the board has made with the aim of keeping the discount down (over 2.7m shares bought back so far this year), and a string of tender offers in particular.
I think the trust was overly aggressive with this – regular readers will know that I am not a fan of holding tender offers too frequently as I believe that it undermines the benefits of the closed-end structure and encourages more of a short-term mindset amongst shareholders.
I was pleased then, back in February, when IGC announced plans to drop these in favour of five-yearly performance triggered tender offers. I have said elsewhere that I do not think that these do much to keep day to day discounts narrow but they do at least provide frustrated investors with an exit if things have not been going well for a while.
The board also took the opportunity to… read more here