Discount Delver: the 10 cheapest trusts on 2 August 2024
We reveal the biggest investment trust discount changes over the past week.
2nd August 2024 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).  Â
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.  Â
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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.  Â
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.Â
For the first time in over four years, interest rates are falling, which in theory is good news for the types of investment trusts that have been hurt by rising interest rates. One sector that has been under the cosh is renewable energy infrastructure, with investors instead turning their attention towards the bond market, which is lower risk and has seen yields increases in response to rate rises.Â
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While interest rates are not returning to the days of being ultra-low, the prospect of further small rate cuts is expected to be a tailwind for this out-of-form sector.
Premier Miton Global Renewables Trust (LSE:PMGR), which invests in other renewable energy trusts and companies that are renewable energy developers, was the biggest discount riser of the past week, seeing an increase of 5.5 percentage points to -17.7%. Also appearing in the table is Downing Renewables & Infrastructure (LSE:DORE), which is now on a discount of -35.7%.
Another sector that lost out amid rising rates, and which could now make a sustained comeback, is UK smaller companies. Two investment trusts specialising in the sector were the second and third-biggest discount risers of the past week: Aberforth Geared Value & Income (LSE:AGVI) and Miton UK Microcap (LSE:MINI).
| Investment trust | Sector | Current discount (%) | Discount/premium change over past week* (%) |
| Premier Miton Global Renewables Trust (LSE:PMGR) | Infrastructure Securities | -17.71 | -5.50 |
| Aberforth Geared Value & Income (LSE:AGVI) | UK Smaller Companies | -9.77 | -3.60 |
| Miton UK Microcap (LSE:MINI) | UK Smaller Companies | -8.72 | -3.40 |
| Weiss Korea Opportunity (LSE:WKOF) | Country Specialist | -4.86 | -3.40 |
| Seraphim Space Investment Trust (LSE:SSIT) | Growth Capital | -44.64 | -3.40 |
| Hansa Investment Company (LSE:HAN) | Flexible Investment | -43.40 | -3.20 |
| Schroder European Real Estate Inv Trust (LSE:SERE) | Property - Europe | -40.88 | -2.50 |
| Henderson Opportunities (LSE:HOT) | UK All Companies | -11.11 | -2.30 |
| Biotech Growth (LSE:BIOG) | Biotechnology & Healthcare | -9.01 | -2.30 |
| Downing Renewables & Infrastructure (LSE:DORE) | Renewable Energy Infrastructure | -35.70 | -1.80 |
Source: Morningstar. *Data from close of trading 25 July 2024 to close of trading 1 August 2024.
These articles are provided for information purposes only. Â Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. Â 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.