Discount Delver: the 10 cheapest trusts on 19 January 2024
We reveal the biggest investment trust discount changes over the past week.
19th January 2024 10:21
by 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.
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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 400investment 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, the most notable mover is Gabelli Merger Plus+ Trust (LSE:GMP), with its discount widening by nearly 15 percentage points to -29.76%. This is a specialist strategy that attempts to profit from the difference between the public market price and the price achieved through corporate catalyst events, such as announced mergers and takeovers.
Second in the table is Alternative Income REIT (LSE:AIRE), which saw its discount increase more than seven percentage points to -19%. It invests in a diversified portfolio of UK properties, with the aim of delivering a secure and predicate income return. It is joined in the top 10 by two other property trusts, Custodian Property Income REIT (LSE:CREI) and Tritax EuroBox Euro (LSE:BOXE), which are respectively trading on discounts of -17.5% and -38.1%. Investing in property has become less attractive given interest rate rises, as this has increased the income on offer from lower-risk areas, such as money market funds and bonds.
Elsewhere, despite the UK stock market carrying a cheap valuation compared to its own history and other regions, such as the US, investors are continuing to keep their powder dry, with both Schroder Income Growth (LSE:SCF) and Rights & Issues Investment Trust (LSE:RIII) among the biggest discount movers of the past week, on discounts of -10.6% and -13.2%.
| Investment trust | Sector | Current discount (%) | Discount/premium change over past week* (%) |
| Gabelli Merger Plus+ Trust (LSE:GMP) | Hedge Funds | -29.76 | -14.93 |
| Alternative Income REIT (LSE:AIRE) | Property - UK Commercial | -19.02 | -7.27 |
| LMS Capital (LSE:LMS) | Private Equity | -62.39 | -6.97 |
| Gresham House Energy Storage (LSE:GRID) | Renewable Energy Infrastructure | -41.29 | -6.62 |
| Manchester & London (LSE:MNL) | Global | -18.32 | -6.41 |
| Custodian Property Income REIT (LSE:CREI) | Property - UK Commercial | -17.53 | -6.09 |
| Gore Street Energy Storage Fund (LSE:GSF) | Renewable Energy Infrastructure | -32.54 | -5.59 |
| Schroder Income Growth (LSE:SCF) | UK Equity Income | -10.57 | -4.98 |
| Tritax EuroBox Euro (LSE:BOXE) | Property - Europe | -38.10 | 4.75 |
| Rights & Issues Investment Trust (LSE:RIII) | UK Smaller Companies | -13.19 | -4.71 |
Source: Morningstar. *Data from close of trading 11 January 2024 to close of trading 18 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.