Interactive Investor

Discount Delver: the 10 cheapest trusts on 9 February 2024

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

9th February 2024 12:25

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.

For about a year, alternative asset investment trusts, particularly those that aim to pay an income, have been out of favour owing to interest rates rising. Those rate rises have caused bond yields to rise, which means investors now receive a higher income on low-risk assets, such as UK government bonds, known as gilts. In turn, this has reduced the appeal of assets that are higher up the risk spectrum.

Despite a consensus that the interest rate cycle has peaked, and that there could be some cuts on the cards in 2024 for both the US and UK, alternative asset trusts remain out of favour. This is reflected by five infrastructure and one property trust featuring in this week’s table: VH Global Sustainable Energy Opportunities (LSE:GSEO), Digital 9 Infrastructure (LSE:DGI9), Triple Point Energy Transition (LSE:TENT), NextEnergy Solar (LSE:NESF), Foresight Solar (LSE:FSFL) and Regional REIT (LSE:RGL).

Digital 9 Infrastructure, which is now on a discount of -82.8%, recently announced that it will seek shareholder approval to close its doors. If given the green light, assets will be sold off and capital returned to investors.

The trust, which focuses on what is sometimes called “the plumbing of the internet”, such as data centres and fibre-optic cables, saw its share price plunge after it said in late September that it would be scrapping its dividend target for its 2023 financial year. Since that announcement, its share price has more than halved, and is currently 15.5p.

Investment trust Sector Current discount (%)Discount/premium change over past week* (%)
VH Global Sustainable Energy Opportunities (LSE:GSEO)Renewable Energy Infrastructure-40.95-7.78
Digital 9 Infrastructure (LSE:DGI9)Infrastructure-82.80-6.82
Regional REIT (LSE:RGL)Property - UK Commercial-69.53-6.43
Triple Point Energy Transition (LSE:TENT)Renewable Energy Infrastructure-41.76-6.34
Schiehallion Fund (LSE:MNTN)Growth Capital-46.49-6.32
Symphony International Holding (LSE:SIHL)Private Equity-48.09-5.78
NextEnergy Solar (LSE:NESF)Renewable Energy Infrastructure-27.51-5.43
Schroder Income Growth (LSE:SCF)UK Equity Income-12.96-5.41
Schroders Capital Global Innovation Trust Ord (LSE:INOV)Growth Capital-47.71-4.88
Foresight Solar (LSE:FSFL)Renewable Energy Infrastructure-24.94-4.70

Source: Morningstar. *Data from close of trading 25 January 2024 to close of trading 1 February 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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