Interactive Investor

Discount Delver: the 10 cheapest trusts on 8 March 2024

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

8th March 2024 11:08

by Kyle Caldwell 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. 

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.

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).

Investment trust Sector Current discount (%)Discount/premium change over past week* (%)
Harmony Energy Income Trust (LSE:HEIT)Renewable Energy Infrastructure-66.37-4.32
Chelverton UK Dividend Trust (LSE:SDV)UK Equity Income-2.27-4.21
Aberforth Split Level Income (LSE:ASIT)UK Smaller Companies-8.60-3.44
European Opportunities Trust (LSE:EOT)Europe-11.05-3.34
BH Macro GBP (LSE:BHMG)Hedge Funds-16.04-3.26
Greencoat Renewables (LSE:GRP)Renewable Energy Infrastructure-22.00-2.78
Schroder European Real Estate Inv Trust (LSE:SERE)Property - Europe-42.09-2.78
Phoenix Spree Deutschland Ord (LSE:PSDL)Property - Europe-52.80-2.62
CT UK High Income (LSE:CHI)UK Equity Income-10.23-2.55
Value and Indexed Property Income (LSE:VIP)Property - UK Commercial-21.20-2.29

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

Related Categories

    Investment TrustsUK sharesEurope

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