Discount Delver: the 10 cheapest trusts on 9 June 2023
9th June 2023 11:09
by Kyle Caldwell from interactive investor
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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.
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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 a long read piece this week pointed out, now is one of the best times over the past decade to pick up a potential investment trust bargain.
But bear in mind that in some cases discounts are consistently wide due to erratic performance, as is the case with UIL (LSE:UTL) and Amedeo Air Four Plus (LSE:AA4), which have been the two biggest movers of the past week. Both are very niche, and not widely owned by retail investors.
Of the investment trusts that are more mainstream both Henderson Opportunities (LSE:HOT) and JPMorgan Global Core Real Assets (LSE:JARA) stand out. The former, managed by James Henderson and Laura Foll, invests across the UK equity market, but has a bias towards smaller company shares. The latter, launched in 2019, mainly invests in a mix of real estate, infrastructure and transportation.
A trend that has been prevalent over the past couple of months is the widening of discounts for infrastructure-focused investment companies. This is due to rising interest rates, which has reduced the appeal of such strategies. Gore Street Energy Storage Fund (LSE:GSF), Ecofin US Renewables Infrastructure (LSE:RNEW) and BBGI Global Infrastructure (LSE:BBGI) all feature in this week’s table.
| Investment trust | Sector | Discount/premium change over past week* (%) | Current discount (%) |
|---|---|---|---|
| UIL (LSE:UTL) | Flexible Investment | -7.50 | -34.42 |
| Amedeo Air Four Plus (LSE:AA4) | Leasing | -6.50 | -66.70 |
| CQS Natural Resources G&I Ord (LSE:CYN) | Commodities & Natural Resources | -5.10 | -13.75 |
| ICG-Longbow Senior Sec. UK Prop Debt Inv (LSE:LBOW) | Property - Debt | -5.10 | -43.23 |
| Gore Street Energy Storage Fund (LSE:GSF) | Renewable Energy Infrastructure | -4.80 | -15.39 |
| Henderson Opportunities (LSE:HOT) | UK All Companies | -4.00 | -17.35 |
| JPMorgan Global Core Real Assets (LSE:JARA) | Flexible Investment | -3.70 | -9.24 |
| Ecofin US Renewables Infrastructure (LSE:RNEW) | Renewable Energy Infrastructure | -3.60 | -27.04 |
| Weiss Korea Opportunity (LSE:WKOF) | Country Specialist | -3.60 | -3.03 |
| BBGI Global Infrastructure (LSE:BBGI) | Infrastructure | -3.20 | -5.47 |
Source: Morningstar. *Data from close of trading 1 June 2023 to close of trading 8 June 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.