Discount Delver: the 10 cheapest trusts on 20 January 2023
20th January 2023 10:41
by Kyle Caldwell from interactive investor
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.
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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 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.
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Over the past week, discounts have widened for a number of income-focused investment trusts that invest in a specialist area.
Topping our table, having seen its discount increase by seven percentage points is Triple Point Social Housing REIT (LSE:SOHO). This trust aims to provide long-term inflation linked income from social housing assets in the UK. Over the past five years the performance of its underlying investments – the net asset value (NAV) – have returned 40.9%. However, investors are sitting on large losses, as its share price total return is -35.3%, owing to its wide discount.
Discount Delver: the 10 biggest discount moves over the past week
| Investment trust | Sector | Discount/premium change over past week* (%) | Current discount (%) |
|---|---|---|---|
| Triple Point Social Housing REIT (LSE:SOHO) | Property - UK Residential | -7.15 | -53.20 |
| Augmentum Fintech (LSE:AUGM) | Technology & Media | -6.29 | -35.32 |
| ICG-Longbow Senior Sec. UK Prop Debt Inv (LSE:LBOW) | Property - Debt | -5.75 | -25.89 |
| Downing Strategic Micro-Cap Inv (LSE:DSM) | UK Smaller Companies | -4.68 | -19.27 |
| abrdn European Logistics Income (LSE:ASLI) | Property - Europe | -4.46 | -35.64 |
| SME Credit Realisation Fund (LSE:SCRF) | Debt - Direct Lending | -4.39 | -8.85 |
| Foresight Sustainable Forestry (LSE:FSF) | Farmland & Forestry | -4.29 | -3.81 |
| Harmony Energy Income Trust (LSE:HEIT) | Renewable Energy Infrastructure | -4.18 | -5.64 |
| Residential Secure Income (LSE:RESI) | Property - UK Residential | -4.15 | -36.25 |
| Real Estate Credit Investments (LSE:RECI) | Property - Debt | -3.85 | -8.62 |
Source: Morningstar. *Data from close of trading 12 January 2023 to close of trading 19 January 2023.Â
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.