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. Last Updated: 07/27/2016

U.K. Investment Trusts Feel Heat

LONDON -- British investment trusts are under intense pressure from arbitrageurs looking to unlock value from discounted share prices, with analysts predicting upheaval in the sector.


The ?60 billion ($97 billion) industry, a booming part of the British investment landscape just two years ago, has been hit by excess supply and lumpy performance.


While soaring stock markets have enriched many investors, others have been caught out by investing in laggard performers over the past two years. Added to this is the predisposition of many trusts to currently unfashionable smaller-cap shares.


Unhappy with share price performance and widening discounts of those prices to net asset value, shareholders are listening to anyone bearing promises of realizing value.


"I can't see there is anything in the short term that indicates the supply and demand imbalance has been rectified," said Hamish Buchan, analyst at Natwest Securities.