Discount Delver: the 10 cheapest trusts on 2 September 2022

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

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.

As part of a new weekly series, interactive investor is highlighting the 10 biggest investment trust moves over the past week. We will publish this article every Friday, using data up to the close of trading the previous day.

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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. 

This week, the biggest mover is Baillie Gifford-managedSchiehallion C (LSE:MNTC). It last appeared at the top of our Discount Delver table two weeks ago. Over the past week, it has moved from a discount of 3% to 15.5%. The trust seeks to find tomorrow’s potential ‘unicorns’ before IPO. While its ‘C’ shares are on an eye-catching discount, the main share class Schiehallion Fund (LSE:MNTN) is trading on a big premium of 16.6%.

However, the big trend this week is that seven of the 10 biggest discount movers are property trusts.

The two logistic specialists, Tritax Big Box(LSE:BBOX) and Urban Logistics REIT (LSE:SHED), have seen their share prices dip since late April on the back of Amazon.com (NASDAQ:AMZN) saying that it was scaling back investment in its delivery network. The respective share price declines are 34% and 13.2%.

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Over the past year, the other five trusts, along with other property trusts, have not delivered the protection against inflation that the asset class has historically provided. Over that time period the average bricks and mortar UK residential trust is down 12.1%, while TR Property (LSE:TRY) – the only trust that buys property shares – has lost 28.5%.

The other two trusts in our table, Nippon Active Value (LSE:NAVF) and Baillie Gifford China Growth Trust (LSE:BGCG), have also seen their share prices come under pressure during the past year.

Discount Delver: the 10 biggest discount moves over the past week 

Source: Morningstar. *Data from close of trading 25 August 2022 to close of trading 31 August 2022. Past performance is not a guide to future performance.