Discount Delver: the 10 cheapest trusts on 13 October 2023

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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Pressure on the alternatives investment trust sector, which includes property, private equity, renewable energy and infrastructure, receded this week. 

Compared to last week, where nearly all (eight out of 10) trusts on the discount delver list were in the alternatives space, this week just four were: Premier Miton Global Renewables Trust, Aseana Properties, Ecofin Global Utilities & Infrastructure and Eurocastle Investment. Their discounts rose 14 percentage points, 6 percentage points, 5 percentage points and 5 percentage points respectively over the past week.  

Interest rate rises have triggered a re-pricing of risk assets due to the fact that investors can, for the first time in more than a decade, obtain a decent level of income on low-risk assets such as cash and bonds. 

With yields of 4% and 5% available on cash and relatively low-risk bonds, there’s less appeal in trying to obtain bigger returns for a higher amount of risk. As a result, discounts on investment trusts investing in alternative assets have been rising throughout 2023. 

The rest of the list covered a wide range of sectors. They were income (abrdn Diversified Income & Growth and CT UK High Income), biotech (RTW Biotech Opportunities), and equities (Barings Emerging EMEA Opportunities, Artemis Alpha Trust and Manchester & London).  

Overall, it was a subdued week for discount changes, with just Premier Miton Global Renewables Trust having a notable discount move.  

Source: Morningstar. *Data from close of trading 5 October 2023 to close of trading 12 October 2023.