Discount Delver: the 10 cheapest trusts on 24 March 2023
24th March 2023 11:03
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.
Scottish Mortgage (LSE:SMT) is dominating the headlines in the investment trust world, but it failed to make our top 10 discount movers’ table despite becoming even cheaper over the past week. Its discount is now 19%, and its share price total return shows a loss of 34.4% over one year.
As our columnist Ian Cowie points out, the spectacular decline of the global trust raises important questions for shareholders and potential investors. One is whether Scottish Mortgage can bounce back when the way it invests is facing a headwind in the form of higher interest rates, which have sent valuations and share prices for growth stocks tumbling.
The tightening of monetary policy is negatively impacting other strategies, particularly the debt and property-focused sectors. This is reflected in five of the 10 biggest discount movers over the past week investing in those areas.
GCP Asset Backed Income (LSE:GABI) is the biggest discount mover, widening by nine percentage points. The trust, which is yielding 9.2%, is now available on a 27.4% discount. It is joined by another debt trust – Marble Point Loan Financing (LSE:MPLF) – which has moved from a small premium to a small discount.
Property is an economically sensitive asset class, so it is no surprise to see a lack of investment appetite for such trusts in the current climate. Three trusts that have seen their discounts widen more than others over the past week are: Tritax EuroBox Euro (LSE:BOXE), Life Science REIT (LSE:LABS), and Impact Healthcare REIT (LSE:IHR).
Discount Delver: the 10 biggest discount moves over the past week
| Investment trust | Sector | Discount/premium change over past week* (%) | Current discount (%) |
|---|---|---|---|
| GCP Asset Backed Income (LSE:GABI) | Debt - Direct Lending | -9.00 | -27.40 |
| Atlantis Japan Growth (LSE:AJG) | Japanese Smaller Companies | -6.90 | -19.56 |
| NB Private Equity Partners Class A (LSE:NBPE) | Private Equity | -6.70 | -37.64 |
| Crystal Amber (LSE:CRS) | UK Smaller Companies | -6.60 | -30.42 |
| Marble Point Loan Financing (LSE:MPLF) | Debt - Structured Finance | -5.70 | -3.57 |
| Tritax EuroBox Euro (LSE:BOXE) | Property - Europe | -5.30 | -48.36 |
| Barings Emerging EMEA Opportunities (LSE:BEMO) | Global Emerging Markets | -5.30 | -19.55 |
| Cordiant Digital Infrastructure (LSE:CORD) | Infrastructure | -4.70 | -21.83 |
| Life Science REIT (LSE:LABS) | Property - UK Commercial | -4.70 | -40.22 |
| Impact Healthcare REIT (LSE:IHR) | Property - UK Healthcare | -4.60 | -16.35 |
Source: Morningstar. *Data from close of trading 16 March 2023 to close of trading 23 March 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.