Discount Delver: the 10 cheapest trusts on 15 November 2024
We reveal the biggest investment trust discount changes over the past week.
15th November 2024 10:03
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).  Â
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.  Â
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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.Â
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Shortly before interest rates started rising, there were a flurry of investment trust launches in specialist areas, from digital infrastructure and renewable energy to space initiatives.
However, in most cases performance has been weak owing to rate rises. With higher rates comes more interest on cash accounts and higher bond yields. As a result, investors can pick up good levels of income without taking on any, or much, risk. As a result, higher-risk specialist strategies have been out of favour, causing discounts to widen.
One example is HydrogenOne Capital Growth (LSE:HGEN). Since IPO in July 2021, its share price is down 75.5%. Its discount is -75.7%, having increased by 13 percentage points over the past week.
Four other trusts from the renewable energy infrastructure sector make this week’s table: Foresight Environmental Infrastructure (LSE:FGEN), Bluefield Solar Income Fund (LSE:BSIF), Greencoat Renewables (LSE:GRP), and SDCL Energy Efficiency Income (LSE:SEIT). There's also Premier Miton Global Renewables Trust (LSE:PMGR), which sits in the broader infrastructure sector.
Such investment trusts offer eye-catching yields of around 7% to 8%, but it appears that investors are still shying away due to yields of 4% to 5% being available elsewhere for much lower risk.
| Investment trust | Sector | Current discount (%) | Discount/premium change over past week* (%) |
| HydrogenOne Capital Growth (LSE:HGEN) | Renewable Energy Infrastructure | -75.70 | -13.10 |
| VPC Specialty Lending Investments (LSE:VSL) | Debt - Direct Lending | -44.35 | -9.30 |
| Foresight Environmental Infrastructure (LSE:FGEN) | Renewable Energy Infrastructure | -32.44 | -6.90 |
| JPMorgan UK Small Cap Growth & Income (LSE:JUGI) | UK Smaller Companies | -12.75 | -6.40 |
| Premier Miton Global Renewables Trust (LSE:PMGR) | Infrastructure Securities | -10.93 | -6.00 |
| Bluefield Solar Income Fund (LSE:BSIF) | Renewable Energy Infrastructure | -22.70 | -4.80 |
| Pershing Square Holdings (LSE:PSH) | North America | -34.69 | -3.80 |
| Target Healthcare REITÂ (LSE:THRL) | Property - UK Healthcare | -28.13 | -3.80 |
| Greencoat Renewables (LSE:GRP) | Renewable Energy Infrastructure | -26.10 | -3.30 |
| SDCL Energy Efficiency Income (LSE:SEIT) | Renewable Energy Infrastructure | -41.23 | -3.00 |
Source: Morningstar. *Data from close of trading 7 November 2024 to close of trading 14 November 2024.Â
These articles are provided for information purposes only. Â Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. Â 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.