Interactive Investor

Discount Delver: the 10 cheapest trusts on 15 December 2023

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

15th December 2023 11:44

by Kyle Caldwell 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.

As has been the case throughout 2023, the vast majority of investment trusts featuring in our table this week invest in alternative assets. In particular, specialist trusts that pay an income have been out in the cold, due to the higher level of income investors can obtain through lower-risk assets, with cash and government bonds with short lifespans offering yields of around 5%.

Given this backdrop, there’s less appeal in trying to obtain bigger returns for a higher amount of risk. As a result, discounts for investment trusts investing in alternative assets have been rising throughout the year, which reflects more sellers than buyers.

However, it is worth pointing out that some specialist trusts have been staging a recovery of late. Our monthly data tables, complied by Morningstar, show that over one month (to 1 December 2023) Schiehallion Fund (LSE:MNTN) is up 45.9%, while Gresham House Energy Storage (LSE:GRID) and Gore Street Energy Storage Fund (LSE:GSF) are up 28.5% and 26.9%

Top of the table this week is debt portfolio Eurocastle Investment (EURONEXT:ECT), followed by commodity duo CQS Natural Resources G&I (LSE:CYN) and Golden Prospect Precious Metal (LSE:GPM).

Various other specialist trusts feature, with sectors represented including private equity, property, biotechnology and healthcare, infrastructure and renewable energy infrastructure.

Shires Income (LSE:SHRS), which invests in UK dividend-paying shares, also features. Its discount has risen by 3.89% percentage points over the past week to reach -14.12%. This discount is much higher then the UK equity income average of -4.4%.

Investment trust Sector Current discount (%)Discount/premium change over past week* (%)
Eurocastle Investment (EURONEXT:ECT)Debt - Loans & Bonds-32.68-5.39
CQS Natural Resources G&I (LSE:CYN)Commodities & Natural Resources-15.93-4.88
Golden Prospect Precious Metal (LSE:GPM)Commodities & Natural Resources-20.35-4.32
Princess Private Equity (LSE:PEY)Private Equity-30.11-4.11
ICG-Longbow Senior Sec. UK Prop Debt Inv (LSE:LBOW)Property - Debt-50.04-3.98
Shires Income (LSE:SHRS)UK Equity Income-14.12-3.89
Syncona (LSE:SYNC)Biotechnology & Healthcare-33.93-3.58
NB Global Monthly Income Fund (LSE:NBMI)Debt - Loans & Bonds-12.71-3.58
Digital 9 Infrastructure (LSE:DGI9)Infrastructure-71.54-3.35
VH Glob Sustainable Energy Opp (LSE:GSEO)Renewable Energy Infrastructure-32.34-3.30

Source: Morningstar. *Data from close of trading 7 December 2023 to close of trading 14 December 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.

Related Categories

    Investment TrustsUK sharesEurope

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