ZURICH, Switzerland (HedgeWorld.com)–The directors of Altin AG, a fund of funds listed on the London and Swiss stock exchanges, decided to reduce capital if the share trades at a discount of more than 5% to the fund’s net asset value.
Previously, this hurdle was set at 10%. “We’re tightening up the measures already in place,” said Tony Morrongiello, chief executive of Altin’s investment adviser, 3A Alternative Asset Advisors. “We think that holding the discount below 5% is sustainable.”
The gap has narrowed dramatically since 2001, when it was as wide as 25%. In October of that year, a support policy was first instituted. By January 2004, the stock had caught up with the NAV and was trading at a slight premium to it at times (see ).
But the discount widened in the past few months and currently is fluctuating around 4% to 5%. Mr. Morrongiello said the goal is to keep down volatility in the discount. The fund itself is a diversified vehicle with low volatility in its returns.
The board has given 3A the authority to buy back shares if the discount goes above 5% at a certain time. Many of the Altin underlying funds are closed to investment, so buying those funds indirectly via Altin stock at a discount is advantageous. “We’ve done it in the past and it’s been a good investment,” said Mr. Morrongiello.