Attack of the arbs: The trusts at risk from activists

Investment trust analysts have warned arbitrage activity will be rife in 2012 and could lead to a number of wind-ups in the sector this year.

Corporate activity has been steadily increasing in the closed-ended sector since 2008’s credit crisis. Last year activists attacked a number of trusts, building up stakes in companies they perceived were delivering weak performance. In total, 30 companies were wound up. Here investment trust analysts and MAM’s Nick Greenwood tell Investment Week which trusts could be under threat from arbitrageurs. Fund of hedge funds The fund of hedge funds sector is plagued with arbitrage activity, with the likes of Laxey Partners and Weiss taking advantage of the wide discounts up for grabs. ...