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.
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The biggest investment trust discount moves over the past week came from trusts that provide debt financing, and collect coupon payments to return to shareholders.
Lindsell Train Ltd, the trust run by Nick Train’s fund group Lindsell Train and which owns a large share of the fund group itself, also made the Discount Delver list. It moved from a 5.5% discount to a 12% discount. It has traded on a 3.6% premium on average over the past 12 months.
In a relatively quiet August week for markets, no investment sector dominated the biggest discount moves’ list.
Other trusts to feature were: Weiss Korea Opportunity (6.6 percentage point move); Premier Miton Global Renewables Trust (5.7 percentage point move); Doric Nimrod Air Three (4.5 percentage point moves); Syncona (4.4 percentage point move), Invesco Select UK Equity (4.4 percentage point move); Henderson Far East Income (4.3 percentage point move); and HarbourVest Global Private Equity (3.6 percentage point move).
This list includes trusts in the renewable energy, private equity, biotechnology and UK equity sectors.
|Trust||Association of Investment Companies (AIC) Sector||Current discount||Weekly change in discount*|
|Eurocastle Investment||Debt - Loans & Bonds||-25.46||-7.74|
|Blackstone Loan Financing||Debt - Structured Finance||-31.78||-6.93|
|Lindsell Train Ltd||Global||-12.07||-6.66|
|Weiss Korea Opportunity||Country Specialist||-0.02||-6.61|
|Premier Miton Global Renewables Trust||Infrastructure Securities||-9.70||-5.70|
|Doric Nimrod Air Three||Leasing||42.76||-4.58|
|Syncona||Biotechnology & Healthcare||-27.18||-4.40|
|Invesco Select UK Equity||UK Equity Income||-12.19||-4.36|
|Henderson Far East Income||Asia Pacific Equity Income||-3.31||-4.32|
|HarbourVest Global Priv Equity||Private Equity||-42.68||-3.58|
Source: Morningstar. *Data from close of trading 17 August 2023 to close of trading 24 August 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.