Discount Delver: the 10 cheapest trusts on 10 March 2023
10th March 2023 11:12
by Kyle Caldwell 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.
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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.
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As was the case last week, adventurous strategies dominate the table. This is a reflection of investors remaining cautious in the face of high inflation, and rising interest rates.
The only trust remaining in the table from last week is Schiehallion Fund (LSE:MNTN), which was also the biggest discount riser in the investment trust universe. The trust, which invests in unlisted firms, is experiencing less demand for its strategy due to interest rates being higher. As investors can now get higher returns on cash, higher-risk investments are less attractive. Its discount has risen this week by over 10 percentage points to 42.8%.
Single-country funds backing Japan and China, Atlantis Japan Growth (LSE:AJG) and JPMorgan China Growth & Income (LSE:JCGI), have also seen their discounts widen notably. Such trusts are best suited as potential satellite holdings as part of a diversified portfolio, due to their higher-risk nature.
Another theme is the inclusion of three property trusts: Tritax Big Box (LSE:BBOX), Urban Logistics REIT (LSE:SHED), and Target Healthcare REIT (LSE:THRL). Rising interest rates are a headwind for property trusts. In addition, it is an economically sensitive asset class.
Discount Delver: the 10 biggest discount moves over the past week
| Investment trust | Sector | Discount/premium change over past week* (%) | Current discount (%) |
|---|---|---|---|
| Schiehallion Fund (LSE:MNTN) | Growth Capital | -10.60 | -42.79 |
| Baker Steel Resources (LSE:BSRT) | Commodities & Natural Resources | -6.90 | -39.15 |
| Atlantis Japan Growth (LSE:AJG) | Japanese Smaller Companies | -5.49 | -13.12 |
| JPMorgan China Growth & Income (LSE:JCGI) | China/Greater China | -4.83 | -7.01 |
| BlackRock Throgmorton Trust (LSE:THRG) | UK Smaller Companies | -4.63 | -6.41 |
| Tritax Big Box (LSE:BBOX) | Property - UK Logistics | -4.46 | -27.71 |
| Schiehallion C (LSE:MNTC) | Growth Capital | -4.44 | -45.51 |
| Urban Logistics REIT (LSE:SHED) | Property - UK Logistics | -4.42 | -27.53 |
| Castelnau Group (LSE:CGL) | Flexible Investment | -4.41 | -8.05 |
| Target Healthcare REIT (LSE:THRL) | Property - UK Healthcare | -4.39 | -29.71 |
Source: Morningstar. *Data from close of trading 2 March 2023 to close of trading 9 March 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.
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