Interactive Investor

Discount Delver: the 10 cheapest trusts on 19 April 2024

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

19th April 2024 09:38

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. 

Over the past week, a couple of investment trusts trading on premiums, or close to the value of their underlying investments – the net asset value (NAV) – have seen their discounts widen.

The top mover is Intuitive Investments Group (LSE:IIG), which invests in fast-growing businesses in the life sciences, healthcare and technology. It is now trading on a small discount of -2.5% after being on a premium of 7.1% last week.

Rockwood Strategic (LSE:RKW), which invests in UK smaller companies, has moved on to a small discount of -2% from a premium of 3.7% a week ago, while HgCapital Trust (LSE:HGT) has seen its discount widen from -1.3% to -4.6%.

Most investment trusts are trading on a discount due to risk-off sentiment. In response, some boards have been trying to rein in discounts through share buybacks.

The ideal scenario for investors is buying an investment trust on a discount and, over time, seeing that discount narrow or vanish, as this gives the share price a boost, even if there is no movement in the underlying NAV. However, the flip side is that the discount could widen, so your shares lose more value than the underlying assets.

Investment trust Sector Current discount (%)Discount/premium change over past week* (%)
Intuitive Investments Group (LSE:IIG)Biotechnology & Healthcare-2.45-9.56
Gulf Investment Fund (LSE:GIF)Global Emerging Markets-14.83-8.88
Rockwood Strategic (LSE:RKW)UK Smaller Companies-1.99-5.73
Asian Energy Impact Trust (LSE:AEIT)Renewable Energy Infrastructure-51.18-5.14
UIL (LSE:UTL)Flexible Investment-42.48-4.01
Gresham House Energy Storage (LSE:GRID)Renewable Energy Infrastructure-70.78-3.35
HgCapital Trust (LSE:HGT)Private Equity-4.61-3.34
Target Healthcare REIT (LSE:THRL)Property - UK Healthcare-31.58-3.29
Tritax EuroBox Euro (LSE:BOXE)Property - Europe-43.59-3.08
Custodian Property Income REIT (LSE:CREI)Property - UK Commercial-19.30-2.93

Source: Morningstar. *Data from close of trading 11 April 2024 to close of trading 18 April 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.

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