Interactive Investor

Discount Delver: the 10 cheapest trusts on 10 November 2023

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

10th November 2023 11:18

Kyle Caldwell from interactive investor

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.

Property funds remain out in the cold, with investors looking elsewhere for income. With lower-risk assets – cash and short-dated UK government bonds – offering yields of around 4.5% to 5% - income investors have more choice and are less incentivised to take on greater levels of risk.

Commercial property is a bellwether for the wider economy, meaning it is an economically sensitive asset class. With a potential recession on the cards in 2024, many investors are cautious about the prospects of investing in bricks and mortar. As a result, the average discount for UK commercial property trusts is -25.6%. Over the past year, the average trust has lost 13.3% in share price total return terms.

Four property-focused trusts feature in this week’s table: abrdn Property Income Trust (LSE:API), Impact Healthcare REIT (LSE:IHR), Balanced Commercial Property (LSE:BCPT), and Ground Rents Income Fund (LSE:GRIO).

However, topping the table, are two specialist trusts: Eurocastle Investment (EURONEXT:ECT) and Foresight Sustainable Forestry (LSE:FSF).

Troy Income & Growth (LSE:TIGT) is among the 10 biggest discount risers over the past week. This trust usually trades around par, meaning it seldom offers investors the chance to buy on a big discount, due to it having a discount control mechanism in place. However, the trust said last week that it has suspended this mechanism due to a possible merger with another investment trust. As a result, its discount has widened.

Investment trust Sector Current discount (%)Discount/premium change over past week* (%)
Eurocastle Investment (EURONEXT:ECT)Debt - Loans & Bonds-35.61-8.30
Foresight Sustainable Forestry (LSE:FSF)Farmland & Forestry-34.96-6.60
abrdn Property Income Trust (LSE:API)Property - UK Commercial-44.13-4.20
Impact Healthcare REIT (LSE:IHR)Property - UK Healthcare-26.41-4.20
Balanced Commercial Property (LSE:BCPT)Property - UK Commercial-44.79-4.10
Troy Income & Growth (LSE:TIGT)UK Equity Income-7.21-3.10
Ground Rents Income Fund (LSE:GRIO)Property - UK Residential-67.76-3.10
US Solar Fund (LSE:USF)Renewable Energy Infrastructure-41.19-3.00
Literacy Capital (LSE:BOOK)Private Equity-8.69-2.80
Aurora (LSE:ARR)UK All Companies-12.33-2.80

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