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.

Another policy to reassure shareholders is calculating Altin’s management fee on its market capitalization rather than on assets under management. “If the discount opens, we as investment managers will be the first to suffer the consequences,” Mr. Morrongiello said.

Asked whether the fund might in the future list on the New York Stock Exchange or some other U.S. venue, he said he’s not sure. Listing on the London Stock Exchange has brought to the fund U.K.-based investors, who now comprise more than 30% of its shareholders.

The fund’s market cap is around US$230 million. Its adviser, 3A, manages approximately US$1 billion in hedge fund assets and is part if Swiss banking group SYZ & Co.

CKurdas@HedgeWorld.com