Interactive Investor

Discount Delver: the 10 cheapest trusts on 22 September 2023

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

22nd September 2023 12:02

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).  

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.

Alternative approaches to generating income are still out of favour, given that yields of around 5% are available on lower-risk cash and bonds.

The biggest mover over the past week is Life Science REIT (LSE:LABS), which has seen its discount increase by over seven percentage points. It invests in a diversified portfolio of UK properties that are leased, or intended to be leased, to tenants operating in the life sciences sector.

Other alternative income trusts that have seen their discounts widen over the past week are GCP Asset Backed Income (LSE:GABI), Cordiant Digital Infrastructure (LSE:CORD), and Atrato Onsite Energy (LSE:ROOF).

Private equity trusts are also still out of favour, with Symphony International Holding (LSE:SIHL) and EPE Special Opportunities (LSE:ESO) featuring in our table. As we’ve covered, the key reason this type of investment is not in demand at the moment is due to scepticism over whether the valuations of unlisted companies have re-priced sufficiently to account for the higher interest rate environment.

Investment trust Sector Current discount (%)Discount/premium change over past week* (%)
Life Science REIT (LSE:LABS)Property - UK Commercial-20.867.43
Shires Income (LSE:SHRS)UK Equity Income-8.024.92
GCP Asset Backed Income (LSE:GABI)Debt - Direct Lending-33.934.39
Symphony International (LSE:SIHL)Private Equity-47.214.30
EPE Special Opportunities (LSE:ESO)Private Equity-44.854.06
Cordiant Digital Infrastructure (LSE:CORD)Infrastructure-33.453.84
BlackRock Sustainable American Income (LSE:BRSA)North America-6.863.23
Henderson High Income (LSE:HHI)UK Equity & Bond Income-1.573.22
Atrato Onsite Energy (LSE:ROOF)Renewable Energy Infrastructure-25.293.13
BlackRock Latin American (LSE:BRLA)Latin America-13.293.08

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

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