Interactive Investor

Discount Delver: the 10 cheapest trusts on 26 January 2024

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

26th January 2024 10:33

Kyle Caldwell 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).  

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.

There have been notable discount moves for four investment trusts over the past week, with three specialising in renewable energy infrastructure assets.

At the top of the table is Gresham House Energy Storage (LSE:GRID), which saw its discount widen by 11 percentage points to reach -52.46%. It invests in utility scale operational energy storage systems, which utilise batteries and generators. In common with other alternative asset investment trusts, Gresham House Energy Storage saw its share price rally over a two-month period from the start of November amid expectations that the interest rate cycle had peaked and there could be cuts on the cards in 2024. However, it has since been a bruising month, with the shares down 36.4% year-to-date. As a result, it has given up all those two-month gains, with the share price now down 17.9% since 1 November 2023. As a result of the declining share price, its dividend yield has been rising, and now stands at 10.6%.

HydrogenOne Capital Growth (LSE:HGEN), the second-biggest discount mover over the past week, is up 17.6% since the start of November. However, it has been a bumpy week, with the share price giving up 16.4%, falling from 63p to 53p. It is now on a discount of -50.5%, having widened by more than 10 percentage points. It pays no income.

Fourth in the table is Harmony Energy Income Trust (LSE:HEIT), which saw its discount increase by over seven percentage points to -42.75%. It also staged a recovery from the start of November, but it has since fizzled out. Since that date, its share price is now 7% in the red. It invests in commercial-scale energy storage and renewable energy generation projects. Its yield stands at 12.1%.

The other big discount mover this week is Custodian Property Income REIT (LSE:CREI), which is now on a -26.4% discount. Its discount has widened since it announced it is snapping up abrdn Property Income Trust (LSE:API), which will create a £1 billion portfolio.

Renewable energy infrastructure trusts are a mixed bag, so it is important that investors look under the bonnet and understand how each one invests. Some of these specialist trusts invest in a niche area, such as solar, wind, hydrogen, energy efficiency or energy storage. Others have a mix of renewable exposure, with some aiming to benefit both from when the wind blows and when the sun shines.   

Investment trust Sector Current discount (%)Discount/premium change over past week* (%)
Gresham House Energy Storage (LSE:GRID)Renewable Energy Infrastructure-52.46-11.18
HydrogenOne Capital Growth (LSE:HGEN)Renewable Energy Infrastructure-50.50-10.65
Custodian Property Income REIT (LSE:CREI)Property - UK Commercial-26.42-8.89
Harmony Energy Income Trust (LSE:HEIT)Renewable Energy Infrastructure-42.75-7.64
BlackRock Latin American (LSE:BRLA)Latin America-12.99-3.71
Gore Street Energy Storage Fund (LSE:GSF)Renewable Energy Infrastructure-36.05-3.50
Greencoat Renewables (LSE:GRP)Renewable Energy Infrastructure-18.04-3.36
Geiger Counter (LSE:GCL)Commodities & Natural Resources-19.50-3.08
Tritax EuroBox Euro (LSE:BOXE)Property - Europe-40.63-2.53
UIL (LSE:UTL)Flexible Investment-36.26-2.52

Source: Morningstar. *Data from close of trading 18 January 2024 to close of trading 25 January 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.