Interactive Investor

Discount Delver: the 10 cheapest trusts on 3 May 2024

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

3rd May 2024 10:18

by Kyle Caldwell from interactive investor

Share on

Giant per cent sign 600

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 were only small discount movements in the investment trust universe over the past week.

The biggest riser, Premier Miton Global Renewables Trust (LSE:PMGR), saw its discount edge up by just over four percentage points to -19.8%. Its discount reflects continued weak sentiment towards the area it focuses on, with trusts in the sector regularly appearing in our table over the past 18 months.

While the yields for renewable energy infrastructure investment trusts are higher, investors have been focusing on lower-risk areas where yields have risen. For example, cash-like money market funds are offering yields of around 5%.

Premier Miton Global Renewables Trust invests in investment trusts across the sector and companies that are renewable energy developers. James Smith, its fund manager, says the higher yields on offer, of around 7% to 8%, versus cash and gilts, can make a huge difference over the long term.

Smith says: “For me, a fairer comparator (rather than money market funds) is inflation-linked exchange-traded funds (ETFs), due to much of the underlying revenues for renewable energy infrastructure trusts being inflation linked. When you compare the two, there’s a big difference in yield and, over the long term, it can make a huge difference.”

He argues that the sector “has been oversold with the market being overly fixated on interest rates”.

Smith adds: “The discounts and the yields on offer mean that investors are being paid to wait for a recovery to play out. Interest rate cuts would be helpful, but even without that happening the fact that renewable energy infrastructure trusts have been growing their earnings should be enough to narrow discounts and boost share prices at these low levels.”

Investment trust Sector Current discount (%)Discount/premium change over past week* (%)
Premier Miton Global Renewables TrustInfrastructure Securities-19.76-4.39
JLEN Environmental Assets GroupRenewable Energy Infrastructure-23.59-3.57
Schroder British Opportunities (LSE:SBO)Growth Capital-35.59-3.24
abrdn European Logistics Income (LSE:ASLI)Property - Europe-29.01-3.20
Livermore Investments (LSE:LIV)Flexible Investment-53.94-3.05
Syncona (LSE:SYNC)Biotechnology & Healthcare-35.18-2.66
Jupiter Green (LSE:JGC)Environmental-32.01-2.43
Weiss Korea Opportunity (LSE:WKOF)Country Specialist-4.25-2.40
Rights & Issues Investment Trust (LSE:RIII)UK Smaller Companies-14.20-2.08
Ruffer Investment Company (LSE:RICA)Flexible Investment-5.73-2.04

Source: Morningstar. *Data from close of trading 25 April 2024 to close of trading 2 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.

Get more news and expert articles direct to your inbox