Discount Delver: the 10 cheapest trusts on 19 July 2024

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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The biggest discount riser over the past week is Manchester & London (LSE:MNL), which holds over 55% of its assets in just two stocks. Nvidia (NASDAQ:NVDA) accounts for 32.3% of its portfolio, while Microsoft (NASDAQ:MSFT) has a weighting of 24.9%. Its big bets have paid off, up 76.7% and 31.6% over one and three years versus the average global trust return of 21.7% and 3.2%.

However, any stock disappointment for either of those tech companies will harm Manchester & London’s overall returns. Wild swings are to be expected with this fund, reflected by its share price down -15% over the past week. Its discount widened by 8.5 percentage points over the past week to reach -20.8%.

Next in the table is Gore Street Energy Storage Fund (LSE:GSF), which saw its discount increase by nearly seven percentage points to -42.1%. The renewable energy infrastructure trust cut its dividend target this week, which knocked its share price and by extension caused its discount to widen. The annual dividend for its next financial year (which ends on 31 March 2025) has been cut from 7.5p to 7p per share.

Gresham House Energy Storage (LSE:GRID) and Harmony Energy Income Trust (LSE:HEIT), the two other battery specialist investment trusts, have scrapped dividends.

Also of note this week is the appearance of technology investment trusts Allianz Technology Trust (LSE:ATT) and Polar Capital Technology (LSE:PCT) in the table. Both have enjoyed a strong spell of short-term performance, as well as being solid long-term performers. The discounts on offer are a way for investors to pay less for a pricey sector.  

Source: Morningstar. *Data from close of trading 11 July 2024 to close of trading 18 July 2024.