Discount Delver: the 10 cheapest trusts on 23 August 2024
We reveal the biggest investment trust discount changes over the past week.
23rd August 2024 11:04
by 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).  Â
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.  Â
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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.  Â
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.Â
An investment trust from growth-focused fund group Baillie Gifford had the biggest discount move last week.
Schiehallion Fund, which has stakes in unlisted businesses such as SpaceX and TikTok owner ByteDance, saw its discount to NAV grow from -15.9% to -20.8% over the past five trading days.
While the shares have risen this year, since launch in 2017 investors are down around 20%.
Two renewable energy infrastructure trusts also made this week’s Discount Delver list: Octopus Renewables Infrastructure and SDCL Energy Efficiency Income. They now trade on -28.6% and -30.8% discounts respectively.
Similarly, GCP Infrastructure Investment Ord (LSE:GCP) invests in infrastructure, such as healthcare, housing and biomass assets. Its discount rose from -23.6% to -26.2% over the past week.
Other private asset investment trusts on the list this week are ICG Enterprise Trust and CT Private Equity Trust, now on -33.8% and -34.7% discounts.
Generally, trusts investing in unlisted assets have seen discounts rise over the past couple of years, linked to rising interest rates, which have put pressure on asset valuations, and particularly income-producing assets such as infrastructure.
However, the turning of the interest rate cycle, with the Bank of England already making its first rate cut, could lead to discounts narrowing.
Finishing off this week’s Discount Delver list were Miton UK Microcap, M&G Credit Income Investment, Baillie Gifford Shin Nippon and JPMorgan Japan Small Cap Growth & Income.
| Group/Investment | Association of Investment Companies (AIC) Sector | Current discount (%) | Change in discount* (%)Â |
| Schiehallion Fund | Growth Capital | -20.8 | -4.9 |
| Octopus Renewables Infrastructure | Renewable Energy Infrastructure | -28.6 | -3.7 |
| ICG Enterprise Trust | Private Equity | -33.8 | -3.4 |
| Miton UK Microcap | UK Smaller Companies | -10.7 | -3.3 |
| M&G Credit Income Investment | Debt - Loans & Bonds | -1.6 | -3.2 |
| CT Private Equity Trust | Private Equity | -34.7 | -3.1 |
| SDCL Energy Efficiency Income | Renewable Energy Infrastructure | -30.8 | -3.1 |
| Baillie Gifford Shin Nippon | Japanese Smaller Companies | -15.3 | -3 |
| GCP Infrastructure Investment | Infrastructure | -26.2 | -2.6 |
| JPMorgan Japan Small Cap G&IÂ | Japanese Smaller Companies | -8.4 | -2.6 |
Source: Morningstar. *Data from close of trading 15 August 2024 to close of trading 22 August 2024.
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.