Discount Delver: the 10 cheapest trusts on 21 June 2024

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 and those that are not available on the interactive investor platform. 

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Before interest rates started to rise, there was a bumper period of investment trust IPOs. In 2021, there were 16 new launches, with the focus very much on specialist funding for a new tranche of innovative enterprises, from digital infrastructure and renewable energy to space initiatives.

One of the IPOs that year was Seraphim Space Investment Trust (LSE:SSIT). However, in common with other specialist strategies investing in an adventurous area, the rising interest rate environment proved to be a headwind as investors became more cautious. Over the past week, the portfolio of early stage space technology businesses saw its discount edge up by over six percentage points to -43%. Since launch, its share price has lost 50%.

HydrogenOne Capital Growth (LSE:HGEN) was another of 2021’s IPOs and its performance has also been hit by rising interest rates. Its discount now stands at just under -50%. Since launch, its share price has lost 47%. Another trust from the renewable energy sector in this week’s table is Aquila European Renewables (LSE:AERI), which has seen its discount widen to -31.6%.

Also of note this week are two UK trusts. BlackRock Income and Growth (LSE:BRIG) and Henderson Opportunities  (LSE:HOT) are on discounts of -12% and -10.4%. The UK stock market has been performing well over the past nine months or so, but investors continue to shun funds and investment trusts focusing on the region.

Source: Morningstar. *Data from close of trading 13 June 2024 to close of trading 20 June 2024.