Novel Trojan horse scheme for Albany Investment

Albany Investment Trust shareholders fed up with the trust's miserable share price performance over the last five years are being offered the chance to jump ship to another trust.

The Liverpool based firm which, by its own admission, has traded at a persistent discount to net asset value (NAV) is taking drastic action after reviewing the options open to it.

Shareholders will have two options: to get cash for all or part of their holdings, or to roll over their investments into shares of another firm, Troy Income and Growth Trust (TIGT).

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Troy shares trade at a premium to its net asset value, so Albany investors should, in theory, benefit from rolling over their shares into a more highly regarded trust.

Those shareholders rolling over into TIGT will experience a broadly similar dividend yield and a lower total expense ratio than that currently offered by Albany.

Furthermore, TIGT has a discount-to-NAV control mechanism which it has been exercising since January 2010, which has ensured the shares trade at, or close to, NAV.

Albany's board estimates that around 46% of Albany's portfolio of company investments mirrors that of TIGT.

Those Albany shareholders making the switch to TIGT will be offered the chance to do so at a 1% premium to TIGT's NAV. There will be no capital gains tax issues entailed in any transfer.

The news does appear to have done the trick, at 11:00 Albany shares were up 13.4%.

BS