Interactive Investor

Discount Delver: the 10 cheapest trusts on 5 May 2023

5th May 2023 10:26

Sam Benstead 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.   

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. 

Private lender Eurocastle Investment, a £600 million trust, registered the biggest discount move this week, moving from a 28% to 37% discount.  

The trust, which invests in real estate loans in Europe, has been on an average discount of 18.5% over the past 12 months. The property sector is under pressure as interest rates rise, which is having an impact on the affordability of mortgages and therefore homes.  

The next biggest discount move was from Digital 9 Infrastructure, which now sits on a 42.5% discount compared with 37% a week ago. The trust, which has nearly £1 billion in assets, buys assets that facilitate the online world, such as data centres and undersea cables. Its average discount over the past 12 months has been 11%.  

Rising interest rates are also posing a problem for infrastructure trusts, whose valuation is linked to the returns in bond markets as they both generate income for investors.  

The biggest trusts on this week’s Discount Delver list is Syncona, the biotechnology investor, and abrdn Private Equity Opportunities, a private equity trust. They both have more than £1.1 billion in assets and trade at respective 21.6% and 43% discounts, around 3 percentage points higher than a week ago.  

Other big discount moves over the past week include private equity investor Literacy Capital (5.5 percentage point move), JPMorgan Multi-Asset Growth & Income (3 percentage point move), and Baillie Gifford Japan (3 percentage point move).

NameSectorCurrent discount (%)Change in discount (percentage points)
Eurocastle InvestmentDebt - Loans & Bonds-37.08-8.71
Digital 9 InfrastructureInfrastructure-42.69-5.59
Literacy CapitalPrivate Equity-1.35-5.49
EJF InvestmentsDebt - Structured Finance-35.92-4.49
Livermore InvestmentsFlexible Investment-44.33-4.13
SynconaBiotechnology & Healthcare-21.60-3.53
abrdn Private Equity OpportunitiesPrivate Equity-42.73-3.23
JPMorgan Multi-Asset Growth & IncomeFlexible Investment-6.23-2.91
Baillie Gifford JapanJapan-12.02-2.81
NB Distressed Debt New GlbDebt - Loans & Bonds-42.39-2.79

Source: Morningstar. *Data from close of trading 27 April 2023 to close of trading 4 May 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.