Interactive Investor

Discount Delver: the 10 cheapest trusts on 14 June 2024

Trusts investing in unlisted assets saw their discounts widen the most over the past week, writes Sam Benstead.

14th June 2024 12:01

by Sam Benstead from interactive investor

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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.

Trusts investing in unlisted assets saw the biggest discount moves last week. The largest was an eight point move at GCP Asset Backed Income, which invests in private debt. The discount is now -22% on the £380 million trust.

Private equity was also well represented on this week’s Discount Delver list, with Patria Private Equity Trust and Apax Global Alpha both featuring. They now trade on -36.5% and -31% discounts respectively.

Most private equity trusts have been under pressure due to the rising cost of debt, as well as investor scepticism about the true value of unlisted assets, which are given an estimated net asset value by their owners.

Seraphim Space Investment Trust, which owns both listed and unlisted space-related shares, saw its discount move more than five percentage points wider over the past week, up to -30% now.

Greencoat UK Wind and SDCL Energy Efficiency Income were two other trusts investing in alternative assets, in this case energy projects, that saw their discounts widen last week.

Tritax Big Box and 3i Infrastructure also registered a similar discount widening of around four percentage points.

The moves show that while the net asset values of these types of investment trusts can be very stable, this does not stop investors questioning their values and trading their shares, which can lead to big discount changes.

Changes in interest rates, or expectations for interest rates, are often the cause of the changes in discount levels.

In listed equities, discounts on India Capital Growth and Oryx International Growth widened to -10% and -29.5% respectively.

Investment trustSectorCurrent discount %)Change in discount (%)
GCP Asset Backed Income (LSE:GABI)Debt - Direct Lending-21.92-7.82
Seraphim Space Investment Trust (LSE:SSIT)Growth Capital-36.46-7.30
Patria Private Equity Trust (LSE:PPET)Private Equity-29.95-5.39
India Capital Growth (LSE:IGC)India/Indian Subcontinent-9.72-4.34
SDCL Energy Efficiency Income (LSE:SEIT)Renewable Energy Infrastructure-29.15-4.12
Oryx International Growth (LSE:OIG)UK Smaller Companies-29.54-4.07
Tritax Big Box (LSE:BBOX)Property - UK Logistics-13.87-3.94
Greencoat UK Wind (LSE:UKW)Renewable Energy Infrastructure-16.39-3.87
3i Infrastructure Ord (LSE:3IN)Infrastructure-11.21-3.82
Apax Global Alpha (LSE:APAX)Private Equity-30.95-3.71

Source: Morningstar. *Data from close of trading 6 June 2024 to close of trading 13 June 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.

Related Categories

    Investment Trusts

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