Interactive Investor

Discount Delver: the 10 cheapest trusts on 12 January 2024

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

12th January 2024 11:14

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.

    As we reported on earlier this week, funds and investment trusts that have been out of form as rates have risen over the past two years have led the performance tables since the start of November. The catalyst for the change in fortunes has been the hopes and expectations that central banks will begin cutting interest rates this year.

    In particular, investment trusts specialising in real assets, such as renewable energy infrastructure and property, have seen their performances improve over the past two months. However, discounts for many trusts in those sectors remain high. Over the past week discounts widened across the board, accounting for eight of the 10 trusts in our table. This could reflect some profit taking following a strong two-month spell for some trusts. 

    For example, Gore Street Energy Storage Fund (LSE:GSF) is up 19.3% since 1 November 2023. Over the past week its discount widened by -7.6% to reach -26.96%.  

    Second best over that period is UK Commercial Property REIT (LSE:UKCM), up 14.7%. Its discount advanced by four percentage points to hit -25.7%.

    In third, is the biggest discount mover of the past week, Gresham House Energy Storage (LSE:GRID). Its discount increased by nearly eight percentage points to -34.67%. It is up 13.85% since 1 November.

    Lindsell Train (LSE:LTI) bucks the trend as the only global equity portfolio in the table. In common with other funds and trusts managed by the fund house, it is a concentrated portfolio of high-quality growth companies.

    It is managed by both Nick Train and Michael Lindsell. Its 15.32% discount is unusually high. At times, this trust has traded on a very high premium. However, its short-term performance has been underwhelming, with a big stake in its own fund management company one of the recent headwinds as our recent article explained.

    Investment trust Sector Current discount (%)Discount/premium change over past week* (%)
    Gresham House Energy Storage (LSE:GRID)Renewable Energy Infrastructure-34.67-7.86
    Gore Street Energy Storage Fund (LSE:GSF)Renewable Energy Infrastructure-26.96-7.58
    Ecofin Global Utilities & Infrastructure (LSE:EGL)Infrastructure Securities-17.74-6.73
    abrdn European Logistics Income (LSE:ASLI)Property - Europe-36.19-5.06
    Henderson Diversified Income (LSE:HDIV)Debt - Loans & Bonds-7.10-5.02
    UK Commercial Property REIT (LSE:UKCM)Property - UK Commercial-25.70-4.40
    HICL Infrastructure (LSE:HICL)Infrastructure-17.71-3.85
    PRS REIT (LSE:PRSR)Property - UK Residential-31.73-3.79
    Sequoia Economic Infrastructure Income (LSE:SEQI)Infrastructure-12.93-3.76
    Lindsell Train (LSE:LTI)Global-15.32-3.70

    Source: Morningstar. *Data from close of trading 4 January 2024 to close of trading 11 January 2024.

    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.