Interactive Investor

Discount Delver: the 10 cheapest trusts on 30 December 2022

30th December 2022 11:46

by Kyle Caldwell from interactive investor

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

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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.

Investment trust discounts have widened notably in 2022, rising from 1.5% to around 15% on average. 

This has been one of the factors behind investment trust performance faring worse than funds on a like-for-like basis. The ability to gear (borrow to invest) has been another headwind, given that stock markets have been volatile.

As was the case last time around, a variety of sectors appear in our table, which lists the 10 biggest discount moves over the past week.

However, given that it is quieter in terms of trading activity during the festive period, the discount changes have not been dramatic.

The top three trusts in the table, Brown Advisory US Smaller Companies (LSE:BASC), Chrysalis Investments Limited (LSE:CHRY), and BlackRock Energy and Resources Income (LSE:BERI), have seen their discounts increase by three percentage points.

Chrysalis Investments Limited has by far the biggest discount in the table, at 48.8%. Its share price has fallen notably in 2022 (down 69.6%), as funding for tech companies dried up and investors moved to prioritise profits today over the prospects of future growth. The trust buys fledgling companies that might make it big, such as buy now, pay later firm Klarna and digital bank Starling.

Blackstone Loan Financing Limited (LSE:BGLF) and Apax Global Alpha (LSE:APAX) are also both on sizeable discounts, of 29.8% and 27.5%.

Discount Delver: the 10 biggest discount moves over the past week

Investment trustSectorDiscount/premium change over past week* (%)Current discount (%)
Brown Advisory US Smaller Companies (LSE:BASC)North American Smaller Companies-3.53-13.85
Chrysalis Investments Limited (LSE:CHRY)Growth Capital-3.52-48.78
BlackRock Energy and Resources Income (LSE:BERI)Commodities & Natural Resources-3.07-3.85
Blackstone Loan Financing Limited (LSE:BGLF)Debt - Structured Finance-2.87-29.80
BlackRock Sustainable American Income (LSE:BRSA)North America-2.61-6.20
Fidelity Japan Trust (LSE:FJV)Japan-2.59-9.26
Middlefield Canadian Income (LSE:MCT)North America-2.39-8.65
Aberforth Split Level Income (LSE:ASIT)UK Smaller Companies-2.28-10.57
Apax Global Alpha (LSE:APAX)Private Equity-2.15-27.48
Pantheon Infrastructure (LSE:PINT)Infrastructure-2.04-5.86

Source: Morningstar. *Data from close of trading 22 December 2022 to close of trading 29 December 2022. 

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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