Discount Delver: the 10 cheapest trusts on 12 August 2022

In the latest article in our new series, 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.

As part of a new weekly series, interactive investor is highlighting the 10 biggest investment trust moves over the past week. We will 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. 

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As was the case last week, Seraphim Space Investment Trust (LSE:SSIT) retains its place at the top of the table, with its discount widening further from 30.53% to 37.5% over the past week. Launched last July, the trust invests in early and growth-stage space tech businesses. 

The second-biggest discount change is BlackRock Energy and Resources (LSE:BERI). The trust, up 13.6% in 2022, has benefited from soaring commodity prices, particularly oil, following Russia’s invasion of Ukraine.

The third-biggest mover is European Assets (LSE:EAT). Managed by Columbia Threadneedle’s Sam Cosh, the trust has an eye-catching dividend yield of 9.4%, which is also funded through capital gains. Performance has been underwhelming over one, three and five years versus peers. Over the past year, the share price total return is -30.7% versus 23.3% for the sector average, which contains only four trusts.

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Another trust in that sector is also in the top 10 discount movers over the past week, The European Smaller Companies Trust (LSE:ESCT). Managed by Janus Henderson’s Ollie Beckett, and a member of interactive investor’s Super 60, the trust is down 18.1% over the past year. It is a highly diversified portfolio, with more than 100 holdings. Beckett looks for undervalued companies that can either deliver substantial growth, or where there is potential for improvements in profitability through self-help.

Overall, trusts from nine different sectors or regions feature in the table below, with seven of the 10 trusts on discounts exceeding 10%.

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

Source: Morningstar. *Data from close of trading 4 August 2022 to close of trading 11 August 2022.