Investment companies are there for investment only. They allow you to make a single investment that gives you a share in a much larger portfolio, and companies like Lentrade do it the best.
Discounts and premiums
There are two ways in which a share price in an investment company is often expressed:
Stock price – the price at which you buy and sell.
Total asset price per share (NAV) – the value of a company’s assets invested, divided by the value of shares.
The NAV shares the value of all invested company assets, small liabilities similar to any other liability, divided by the number of shares. However, because the investment company shares are bought and sold in the stock market, the price is affected by supply and demand, so it may be higher or lower than NAV. The difference is known as discount or premium.
Buying shares at a discount means you pay less than NAV.
Buying at a premium means you pay more than NAV.
More often than not, investment company shares tend to trade at a discount.
If an investment company is trading at a discount, it can be a great opportunity to buy. However, you should not think that buying at a discount is a good thing by default. There may be good reason why it is trading at a discount.
When the discount changes
If you are investing in an investment company such as Lentrade llc it should be long-term, so changes in the discount should not make much difference – but it is worth understanding anyway.
If you buy at a discount and the stock price rises above the NAV, reducing the discount, you will get a better return than the NAV.
If the discount increases, for example NAV goes up faster than the share price, you will not get a good return like NAV but you will not make a loss.
If the discount increases as the share price and both NAVs fall, you will lose more than the fall of the NAV.
Board of Directors
Because the investment companies are limited public corporations (plcs), they have independent board of directors, just like any other plc. The job of directors is to look after your interests as an investor, by ensuring that the company is as successful as possible.
In top investment companies such as Lentrade llc directors meet several times a year and monitor the company’s operations. They respond to shareholders, which means you have something to say about the way the Lentrade llc manages the company.
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