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.
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As has often been the case during 2023 investment trusts investing in alternative assets dominate the list of the biggest discount declines over the past week.
Five trusts from the renewable energy infrastructure sector feature: Octopus Renewables Infrastructure (LSE:ORIT), Gresham House Energy Storage (LSE:GRID), SDCL Energy Efficiency Income (LSE:SEIT), Gore Street Energy Storage Fund (LSE:GSF), and Renewables Infrastructure Group (LSE:TRIG).
Rate rises have triggered a re-pricing of risk assets due to the fact that investors can, for the first time in more than a decade, obtain a decent level of income on low-risk assets such as cash and bonds.
With yields of 4% and 5% available on cash and relatively low-risk bonds, there’s less appeal in trying to obtain bigger returns for a higher amount of risk. As a result, discounts on investment trusts investing in alternative assets have been rising throughout 2023.
|Investment trust||Sector||Current discount (%)||Discount/premium change over past week* (%)|
|ICG-Longbow Senior Sec. UK Prop Debt Inv (LSE:LBOW)||Property - Debt||-43.28||-13.30|
|Octopus Renewables Infrastructure (LSE:ORIT)||Renewable Energy Infrastructure||-25.43||-9.50|
|Gresham House Energy Storage (LSE:GRID)||Renewable Energy Infrastructure||-36.59||-8.90|
|Oakley Capital Investments (LSE:OCI)||Private Equity||-40.78||-8.50|
|SDCL Energy Efficiency Income (LSE:SEIT)||Renewable Energy Infrastructure||-39.23||-7.80|
|Gore Street Energy Storage Fund (LSE:GSF)||Renewable Energy Infrastructure||-38.09||-7.50|
|Schiehallion Fund (LSE:MNTN)||Growth Capital||-52.99||7.20|
|Sequoia Economic Infrastructure Income (LSE:SEQI)||Infrastructure||-18.01||-5.80|
|CT Private Equity Trust (LSE:CTPE)||Private Equity||-35.59||-5.40|
|Renewables Infrastructure Group (LSE:TRIG)||Renewable Energy Infrastructure||-23.71||-5.20|
Source: Morningstar. *Data from close of trading 28 September 2023 to close of trading 5 October 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.