Interactive Investor

Discount Delver: the 10 cheapest trusts on 31 March 2023

31st March 2023 10:10

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 and those that are not available on the interactive investor platform. 

The biggest discount mover over the past week is Geiger Counter (LSE:GCL), the best-performing investment trust since the Covid-19 stock market sell-off over three years ago. The discount of the trust, which invests in uranium stocks, has increased by nearly 12 percentage points to reach 13.2%.

This specialist trust, which holds £68 million of assets, regularly blows hot and cold. While its three- and five-year returns catch the eye, it has lost 38.7% over the past year versus an average decline of 8.8% for the average commodities and natural resources sector. Over three and five years, it is up 276.3% and 101.6%, versus 198.9% and 198.9% for the sector average. Over 10 years, it has lagged the average trust in its sector, up 12.9% versus 100.4%. 

With specialist funds and investment trusts, the rewards and risks for getting it right or wrong are great. The main examples of specialist funds are those investing in biotech or commodities. They may invest across many kinds, or focus on just one type, such as gold or oil.

In my view, with such funds and investment trusts, it is important to not simply ‘buy and hold’. Instead, be prepared to quit a losing position. If you buy at a bad time, it can be an uphill struggle to get back to even. Even if you time your entry well, keep a close eye on those paper gains and consider banking profits when sentiment swings back the other way. For investors who are willing to stomach the risk, such funds should form only a very small part of a diversified portfolio.

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

Investment trustSectorDiscount/premium change over past week* (%)Current discount (%)
Geiger Counter (LSE:GCL)Commodities & Natural Resources-11.75-13.19
Middlefield Canadian Income (LSE:MCT)North America-14.68-9.05
M&G Credit Income Investment (LSE:MGCI)Debt - Loans & Bonds-7.23-8.91
Triple Point Energy Transition (LSE:TENT)Renewable Energy Infrastructure-36.32-6.7
Aseana Properties (LSE:ASPL)Property - Rest of World-71.25-6.25
Digital 9 Infrastructure (LSE:DGI9)Infrastructure-41.96-5.99
abrdn European Logistics Income (LSE:ASLI)Property - Europe-32.69-5.06
Atrato Onsite Energy (LSE:ROOF)Renewable Energy Infrastructure-13.27-5.81
RTW Venture (LSE:RTW)Biotechnology & Healthcare-32.59-5.7
Golden Prospect Precious Metal (LSE:GPM)Commodities & Natural Resources-14.03-5.27

Source: Morningstar. *Data from close of trading 23 March 2023 to close of trading 30 March 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.

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