Interactive Investor

Discount Delver: the 10 cheapest trusts on 10 February 2023

10th February 2023 10:36

Sam Benstead from interactive investor

We reveal the biggest investment trust discount changes over the past week.

Investment trusts, due to their closed-ended structure, offer investors the chance of picking up a potential bargain. Such an opportunity arises when a trust’s share price is lower than the underlying investments held by the trust (the net asset value, or NAV).

However, a trust trading on a discount to NAV is not necessarily a buying opportunity. There’s likely a good reason why the trust is cheap, such as subdued short- or long-term performance, or poor investor sentiment towards how it invests.

In our weekly series, interactive investor highlights the 10 biggest investment trust discount moves over the past week. We publish this article every Friday, using data up to the close of trading the previous day.

In total, nearly 400 investment trusts have been screened, with the data sourced from Morningstar. Venture Capital Trusts (VCTs) have been excluded. We also strip out trusts with less than £20 million in assets and those that are not available on the interactive investor platform.

This week Jupiter Asset Management said it would stop making new investments in unlisted stocks in its open-ended funds, and announced it was selling part of its position in Starling bank, held in the Jupiter UK Mid Cap fund, to Chrysalis investment trust.

This led to a big move in the discount of Chrysalis, which is also run by Jupiter, as investors showed their frustration at the deal. Its discount moved from 33% to 43% over the past week.

The next biggest mover was Urban Logistics Reit, where the discount rose from 16% to 23.5%, followed by Supermarket Income Reit, whose discount rose from 9% to 16%.

In total there were seven real estate investment trusts (Reits) in the top 10 biggest discount moves over the past week. Rising interest rates are bad for Reits as they lead to increases in bond yields. Bonds compete with Reits as an income stream for investors.

Higher interest rates also lead to more expense debt burdens for Reits and put pressure on property values.

The other trusts completing this week’s Discount Delver list were Baillie Gifford China Growth Trust (4.5 percentage point move), GCP Asset Backed Income (4.5 percentage point move).

Discount Delver: the 10 biggest discount moves over the past week  

Investment trustChange in discount (percentage points)*Current discount (%)
Chrysalis Investments Limited-9.67-43.08
Urban Logistics REIT-7.45-23.46
Supermarket Income REIT-6.78-15.98
Tritax Big Box-5.89-35.62
Target Healthcare REIT-5.19-21.11
Warehouse REIT-4.65-32.01
Baillie Gifford China Growth Trust-4.63-8.76
GCP Asset Backed Income-4.48-17.34
AEW UK REIT-4.40-3.27
Impact Healthcare REIT-3.97


Source: Morningstar. *Data from close of trading 2 February 2023 to close of trading 9 February 2023. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.