Discount Delver: the 10 cheapest trusts on 28 April 2023
28th April 2023 11:07
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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Private lender SLF Realisation Fund (LSE:SLFR) is by far the biggest discount mover over the past week. It is now on a discount of 59.2%, up from 42.9% a week ago. The trust is in the process of realising all remaining assets in the portfolio to shareholders.
Next is Digital 9 Infrastructure (LSE:DGI9). Investec, the investment trust analyst, reiterated its ‘sell’ recommendation on 21 April, while Jefferies also downgraded its rating from “hold” to “underperform”. Both analysts expressed concern over the health of its dividend. Its dividend yield is 8.7%. In an update to the market at the start of April, the board said that it “believes the discount to net asset value at which the company’s share price currently trades materially undervalues the company and its portfolio”.
The third-biggest discount mover is Civitas Social Housing (LSE:CSH). According to analyst QuotedData the trust’s share price has been on a downwards trajectory since a short seller attack in September 2021. According to QuotedData “almost all the points made by the short seller were proved to be unfounded”.
Overall, most investment trusts in the table below are adventurous strategies. With interest rates and inflation high, the appeal of such strategies has reduced.
| Investment trust | Sector | Discount/premium change over past week* (%) | Current discount (%) |
|---|---|---|---|
| SLF Realisation Fund (LSE:SLFR) | Leasing | -16.30 | -59.16 |
| Digital 9 Infrastructure (LSE:DGI9) | Infrastructure | -5.70 | -37.10 |
| Civitas Social Housing (LSE:CSH) | Property - UK Residential | -5.50 | -52.04 |
| HydrogenOne Capital Growth (LSE:HGEN) | Renewable Energy Infrastructure | -4.30 | -51.08 |
| Real Estate Credit Investments (LSE:RECI) | Property - Debt | -3.50 | -14.70 |
| TwentyFour Select Monthly Income (LSE:SMIF) | Debt - Loans & Bonds | -3.40 | -4.62 |
| Bellevue Healthcare (LSE:BBH) | Biotechnology & Healthcare | -3.30 | -10.74 |
| Invesco Bond Income Plus (LSE:BIPS) | Debt - Loans & Bonds | -3.30 | -0.42 |
| Triple Point Social Housing REIT (LSE:SOHO) | Property - UK Residential | -3.20 | -63.00 |
| abrdn Asia Focus (LSE:AAS) | Asia Pacific Smaller Companies | -2.80 | -14.98 |
Source: Morningstar. *Data from close of trading 20 April 2023 to close of trading 27 April 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.