Discount Delver: the 10 cheapest trusts on 13 December 2024
We reveal the biggest investment trust discount changes over the past week.
13th December 2024 10:15
by Kyle Caldwell from interactive investor
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.
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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Embattled real-estate investment trust Home REIT (LSE:HOME) tops the table this week, having seen its discount expand by over 20 percentage points to -30.9%. The trust is undertaking a managed wind-down strategy.
Home REIT suspended its shares last January following its failure to publish annual reports on time after an investor report highlighted valuation issues and difficulties with tenants paying rent.
The investment trust is facing the threat of legal action and a probe by the financial regulator, the Financial Conduct Authority (FCA).
Home REIT said earlier this month that the “ability of the company to make distributions to shareholders may be constrained while the company faces potential shareholder litigation and an FCA investigation”.
The key trend, and this has been the case throughout 2024, is that renewable energy infrastructure trusts are out of favour. This is due to interest rate rises, which have caused bond yields to rise. As a result, investors have been favouring cash and bonds, due to those asset classes being lower risk than more specialist areas, such as renewable energy infrastructure.
The six trusts from the sector in this week’s table are: Gresham House Energy Storage (LSE:GRID), Triple Point Energy Transition (LSE:TENT), Greencoat Renewables (LSE:GRP), VH Global Energy Infrastructure (LSE:ENRG), NextEnergy Solar (LSE:NESF) and Atrato Onsite Energy (LSE:ROOF).
| Investment trust | Sector | Current discount (%) | Discount/premium change over past week* (%) |
| Property - UK Residential | -30.9 | -20.7 | |
| Gresham House Energy Storage (LSE:GRID) | Renewable Energy Infrastructure | -60.7 | -6.9 |
| Middlefield Canadian Income (LSE:MCT) | North America | -13.2 | -6.0 |
| Triple Point Energy Transition (LSE:TENT) | Renewable Energy Infrastructure | -28.1 | -5.9 |
| Literacy Capital (LSE:BOOK) | Private Equity | -9.3 | -4.8 |
| Greencoat Renewables (LSE:GRP) | Renewable Energy Infrastructure | -23.0 | -4.7 |
| VH Global Energy Infrastructure (LSE:ENRG) | Renewable Energy Infrastructure | -42.9 | -4.3 |
| BBGI Global Infrastructure (LSE:BBGI) | Infrastructure | -15.2 | -3.9 |
| NextEnergy Solar (LSE:NESF) | Renewable Energy Infrastructure | -32.1 | -3.8 |
| Atrato Onsite Energy (LSE:ROOF) | Renewable Energy Infrastructure | -15 | -3.7 |
Source: Morningstar. *Data from close of trading 5 December 2024 to close of trading 12 December 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.