Investment trust insider on performance triggered tenders – James Carthew: Back to the drawing board Aberdeen India
If I could devise and patent one simple and guaranteed way to tackle discounts on investment companies, I would probably make a fortune. I am not sure that such a thing exists, however. Over the years, boards have come up with a wide variety of solutions, with varying degrees of success. Some appear to have accelerated the demise of the investment company concerned.
Aberdeen New India (ANII) is the latest underperforming closed-end fund to address the problem. Over five years to 28 February 2022 the £327m trust has generated a total investment return of 44.8% compared to the 61.5% return from its MSCI India benchmark. With the shares trailing at a discount of 16% to net asset value (NAV), that has left shareholders with a total return of just 36.3%.
Fixing the poor performance is largely the problem of Abrdn and portfolio managers Kristy Fong and James Thom, unless the board decides the answer is to change the fund manager. Addressing the discount falls to the board, however.
It has proposed a system of five-yearly performance-triggered tender offers if ANII survives the forthcoming annual continuation in September.
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