Discount Delver: the 10 cheapest trusts on 24 February 2023
24th February 2023 10:25
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 and those that are not available on the interactive investor platform.
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- Lack of bargains among highest-yielding equity trusts
The biggest discount mover over the past week is Octopus Renewables Infrastructure (LSE:ORIT). The trust, which invests in renewable energy companies located in Europe and Australia, is now on a 11.6% discount compared to 5.2% a week ago.
It is joined by two other renewable energy infrastructure trusts: Renewables Infrastructure Group (LSE:TRIG) and Greencoat UK Wind (LSE:UKW).
Areas such as wind farms or solar energy producers have, in many cases, inflation-adjusted cash flows, and may also benefit from higher energy prices.
Chrysalis Investments Limited (LSE:CHRY), which invests in unlisted businesses, made it three weeks in a row on Discount Delver, as investors continued to sell trusts that invest in speculative private companies. Investors are sceptical of the valuations set by investment trusts for unlisted shares, as their published valuations have fallen less than stock market-listed companies.
Discount Delver: the 10 biggest discount moves over the past week
| Investment trust | Sector | Discount/premium change over past week* (%) | Current discount (%) |
|---|---|---|---|
| Octopus Renewables Infrastructure (LSE:ORIT) | Renewable Energy Infrastructure | -6.43 | -11.61 |
| Third Point Investors (LSE:TPOU) | Hedge Funds | -5.62 | -17.85 |
| Digital 9 Infrastructure (LSE:DGI9) | Infrastructure | -5.09 | -24.67 |
| Pantheon Infrastructure (LSE:PINT) | Infrastructure | -4.68 | -12.50 |
| Supermarket Income REIT (LSE:SUPR) | Property - UK Commercial | -4.24 | -21.18 |
| Chrysalis Investments Limited (LSE:CHRY) | Growth Capital | -4.05 | -50.80 |
| Renewables Infrastructure Group (LSE:TRIG) | Renewable Energy Infrastructure | -3.99 | -6.85 |
| Greencoat UK Wind (LSE:UKW) | Renewable Energy Infrastructure | -3.95 | -6.63 |
| abrdn European Logistics Income (LSE:ASLI) | Property - Europe | -3.94 | -26.63 |
| JPMorgan Global Core Real Assets (LSE:JARA) | Flexible Investment | -3.86 | -19.16 |
Source: Morningstar. *Data from close of trading 16 February 2023 to close of trading 23 February 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.