Interactive Investor

Discount Delver: the 10 cheapest trusts on 5 July 2024

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

5th July 2024 11:12

by Sam Benstead from interactive investor

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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. 

Owner of funeral service provider Dignity, Castelnau Group, saw its discount widen the most over the past week, from a 3.4% premium to a –7.1% discount.  

The rise in the discount was a result of a revaluation of its Dignity position, and a jump in the share price that did not keep up with the net asset value (NAV) change of the investment trust. 

A 45.7% revaluation of Dignity led to the shares increasing by about 25%, leading to a widening of the discount.  

The next largest discount move was at abrdn Diversified Income & Growth, where the discount moved eight percentage points to –33.7%. The trust is being wound down and so is selling investments to return capital to shareholders.  

Two UK shares’ investment trusts made the Discount Delver list this week: River UK Micro Cap and Henderson Opportunities, which now trade on –17.1 and –12.9% discounts respectively.

Two debt trusts also featured: RM Infrastructure Income and CVC Income & Growth, which are now on -14.7% and -5.7% discounts. 

Regional REIT is facing concerns about solvency and turning to markets to raise more cash. Its discount is now at –79% after increasing again this week.  

Also appearing on this week’s Discount Delver list were New Star Investment Trust, CT Global Managed Portfolio Income and Baker Steel Resources.

TrustSectorCurrent discount (%)Change in discount (%)*
Castelnau Group Flexible Investment-7.110.4
abrdn Diversified Income & Growth Flexible Investment-33.77.9
Henderson Opportunities UK All Companies-12.96.1
Regional REIT Property - UK Commercial-79.55.9
River UK Micro Cap UK Smaller Companies-17.14.0
New Star Investment Trust Flexible Investment-34.33.7
RM Infrastructure Income Debt - Direct Lending-14.72.9
CVC Income & Growth Debt - Loans & Bonds-5.72.6
CT Global Managed Portfolio Income Flexible Investment-1.72.5
Baker Steel Resources Commodities & Natural Resources-35.92.5

Source: Morningstar. *Data from close of trading 27 June 2024 to close of trading 4 July 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.

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