Discount Delver: the 10 cheapest trusts on 8 March 2024

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.   

• Our Services: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

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. 

There were only small increases in discounts among the biggest movers of the past week, with Harmony Energy Income Trust (LSE:HEIT) and Chelverton UK Dividend Trust (LSE:SDV) heading the table having seen their discounts rise by just over four percentage points.

Harmony Energy is joined by sector rival Greencoat Renewables (LSE:GRP), which has seen its discount edge up by nearly three percentage points. Renewable energy trusts are out of favour due to interest rate rises, which have pushed up bond yields. With bonds paying higher levels of income, investors have more choice available to them.

• Where pro fund buyers are investing their ISAs this year
• ISA ideas: out-of-form areas pros think will make a comeback

Chelverton UK Dividend Trust is one of three UK equity trusts in the table, alongside Aberforth Split Level Income (LSE:ASIT) and CT UK High Income (LSE:CHI). Both UK funds and trusts have been unpopular among investors for a number of years. Time will tell if the British ISA, announced in this week’s Budget, will help boost capital in the UK equity market.

Another trend in play is property being out of favour, due to higher interest rates and sluggish economic growth. Three bricks-and-mortar focused trusts make the table this week: Schroder European Real Estate Inv Trust (LSE:SERE), Phoenix Spree Deutschland (LSE:PSDL) and Value and Indexed Property Income (LSE:VIP).

Source: Morningstar. *Data from close of trading 29 February 2024 to close of trading 7 March 2024.