Interactive Investor

Discount Delver: the 10 cheapest trusts on 22 December 2023

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

22nd December 2023 10:00

Sam Benstead 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.  

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.

Over the past week, equity markets rose on the back of lower than expected inflation figures, causing fund managers to price in lower interest rates next year.

In local currency terms the S&P 500 rose around 1% and the FTSE All-Share rose 2%. Bond yields fell as prices rose.

Falling bond yields have prompted a recent rally in some of this year’s worst-performing trusts, such as those that invest in property and private equity.

Positive sentiment this week meant that investment trust discounts to net asset value were relatively stable over the past five trading days.

The biggest move was at Golden Prospect Precious Metal, whose discount went from 16.4% to 26.9%, according to data from Morningstar.

Another commodities trust also saw its discount widen: CQS Natural Resources G&I, which moved from a 13.1% to 17.8% discount.

A number of trusts in the property sector made this week’s Discount Delver list: Starwood European Real Estate Finance and Life Science REIT. Their discounts increased by around 2.5 percentage points.

Private equity was also a theme on this week’s list. LMS Capital and Seed Innovations saw discounts widen slightly, to 56% and 70%. Discounts in the private equity sector are wide due to doubts from investors about the true value of their investments.

Rounding off the list were Gabelli Merger Plus+ Trust (5.5 percentage point move), UIL (2.9 point move), VinaCapital Vietnam Opp Fund (2.1 point move) and Taylor Maritime Investments (2 point move).

TrustAssociation of Investment Companies (AIC) sectorCurrent discount (%)Weekly discount change* (%)
Golden Prospect Precious Metal Ord (LSE:GPM)Commodities & Natural Resources-26.86-7.30
Gabelli Merger Plus+ Trust Ord (LSE:GMP)Hedge Funds-14.91-5.46
CQS Natural Resources G&I Ord (LSE:CYN)Commodities & Natural Resources-17.80-3.48
UIL OrdFlexible Investment-36.19-2.86
Starwood European Real Estate FinanceProperty - Debt-13.29-2.62
Life Science REIT Ord (LSE:LABS)Property - UK Commercial-32.36-2.49
LMS Capital Ord (LSE:LMS)Private Equity-56.14-2.28
Seed Innovations Ord (LSE:SEED)Private Equity-70.16-2.18
VinaCapital Vietnam Opp Fund Ord (LSE:VOF)Country Specialist-19.53-2.15
Taylor Maritime Investments Ord (LSE:TMI)Leasing-34.38-1.99

Source: Morningstar. *Data from close of trading 14 December 2023 to close of trading 21 December 2023.

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.