Interactive Investor

Discount Delver: the 10 cheapest trusts on 24 May 2024

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

24th May 2024 10:42

by Sam Benstead 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. 

Infrastructure and property investment trusts saw some of the biggest discount moves this week, with nine out of 10 trusts having links to the sectors. 

They were spread across the Association of Investment Companies’ Infrastructure, Property – UK Logistics, Property – UK Healthcare, and Renewable Energy Infrastructure sectors.  

These sectors are vulnerable to higher borrowing costs and are also seen as “bond proxies” as they have income objectives. This means that when bond yields rise, as they did this week due to higher-than-expected inflation, the sectors often sell-off.  

In property, Tritax Big Box and Target Healthcare REIT saw their discounts widen to 14.7% and 33%. 

In infrastructure, Pantheon Infrastructure, 3i Infrastructure, International Public Partnerships and BBGI Global Infrastructure saw discounts widen around five percentage points. The discounts on these trusts now range from 9.3% to 24.7%.  

But there are even wider discounts in the renewable energy infrastructure sector. Octopus Renewables Infrastructure is now on a 35.7% discount, Asian Energy Impact Trust is on a 61.9% discount and NextEnergy Solar is on a 30.8% discount.  

However, top of this week’s Discount Delver list was a private equity trust: Symphony International Holding, moving from a 44.6% discount to a 54.7% discount. 

Like infrastructure and property, private equity is sensitive to interest rates, so rising bond yields this week hurt the value of shares.  

The extremely wide discount suggests that investors are sceptical about the NAV that the trust has given it unlisted investments.  

TrustAIC sectorCurrent discount (%)Discount change* (%)
Symphony International Holding Private Equity-54.6610.03
Pantheon Infrastructure Infrastructure-24.676.46
Tritax Big BoxProperty - UK Logistics-14.706.46
Target Healthcare REIT Property - UK Healthcare-33.046.26
Octopus Renewables Infrastructure Renewable Energy Infrastructure-35.725.99
3i Infrastructure Infrastructure-9.344.60
Asian Energy Impact TrustRenewable Energy Infrastructure-61.934.40
International Public Partnerships Infrastructure-16.004.23
NextEnergy SolarRenewable Energy Infrastructure-30.844.13
BBGI Global Infrastructure Infrastructure-10.444.03

Source: Morningstar. *Data from close of trading 17 May 2024 to close of trading 23 May 2024.

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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