Investment Trusts are quoted companies listed on the London Stock Exchange. They are subject to the listing rules of the UK Listing Authority under the Financial Services and Markets Act. An investment trust invests in shares and securities of other companies that trade on stock markets. The Aurora Investment Trust is a closed end fund. Closed end means that when you want to invest you have to buy shares in the stock market and when you want your money back you have to sell them in the same way.
The investment manager has responsibility for the daily operations of the Trust and its portfolio. They are the decision-makers regarding where to invest capital held by the Trust, and when to sell. The investment manager drives the strategy for enabling the Trust to reach its investment objectives.
An independent board of directors is responsible for oversight of the Trust. The board is also responsible to shareholders and oversees the relationship with the investment manager to ensure that the Trust’s objectives are met.
The NAV is the value per share of all the assets owned by an investment trust. Net asset value is calculated as the value of the trust’s holdings, plus cash and income, less any borrowings and charges. If the trust’s assets increase in value, the NAV will grow, and likewise if the assets decrease in value, the NAV will decrease.
Often the trust’s share price will differ from the NAV. If the share price is above the NAV, the trust is described as trading at a premium. When the share price is below the NAV, the trust is trading at a discount.
While we will not operate a mechanical discount control system we do plan to do a number of things to help the NAV and the share price to converge. We plan to act on a medium term basis, not short term. These actions include share buybacks, transparent reporting and the development of long term regular buying interest.
The mid price is the average of the closing buy and sell prices. An investment trust’s underlying investments are valued at the mid prices of the previous day’s closing.
It is a requirement of HMRC that an investment trust distribute at least 85% of its net income and we intend to comply with that minimum. Therefore the dividend will be a function of the dividends paid by the companies we own and the Trust cost base.
The Aurora Investment Trust will not make use of gearing or leverage.
Aurora Investment Trusts’ shares are traded on the London Stock Exchange. They can be bought by placing an order with a stockbroker or by asking a professional adviser to do so. If you are not sure whether an investment trust is the right investment for you, it is recommended that you speak to a financial adviser.