Discount Delver: the 10 cheapest trusts on 21 October 2022
21st October 2022 13:11
by Kyle Caldwell from interactive investor
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.
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.
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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.Â
Over the past week, discounts have widened for a number of trusts that invest in an adventurous manner, including three that focus on emerging markets:Â Barings Emerging EMEA Opportunities (LSE:BEMO), Mobius Investment Trust (LSE:MMIT), and Fundsmith Emerging Equities Trust (LSE:FEET).
The latter, which was the brainchild of Terry Smith, is proposing to liquidate due to performance not meeting expectations. The vote, which takes place on 11 November, requires 75% shareholder approval from votes cast.
Normally when an investment trust plans to be liquidated, although generally it is a fairly rare occurrence, a rollover option is offered. However, no such option has been given this time.
Elsewhere, two infrastructure trusts feature among the biggest discount movers of the past week: Premier Miton Global Renewables Trust Ord (LSE:PMGR) and Digital 9 Infrastructure (LSE:DGI9). Infrastructure trusts are seeing their discounts widen due to rising UK government bond (gilt) yields, which impact how investors value the expected income on offer.
Discount Delver: the 10 biggest discount moves over the past weekÂ
| Investment trust | Sector | Discount/premium change over past week* (%) | Current discount (%) |
|---|---|---|---|
| Barings Emerging EMEA Opportunities (LSE:BEMO) | Global Emerging Markets | -9.04 | -25.15 |
| Residential Secure Income (LSE:RESI) | Property - UK Residential | -6.90 | -22.47 |
| Premier Miton Global Renewables Trust (LSE:PMGR) | Infrastructure Securities | -5.56 | -11.17 |
| Digital 9 Infrastructure (LSE:DGI9) | Infrastructure | -5.41 | -12.44 |
| BioPharma Credit (LSE:BPCR) | Debt - Direct Lending | -4.81 | -13.10 |
| Schiehallion Fund (LSE:MNTN) | Growth Capital | -4.68 | -17.00 |
| Taylor Maritime Investments (LSE:TMI) | Leasing | -4.35 | -35.42 |
| Mobius Investment Trust (LSE:MMIT) | Global Emerging Markets | -4.13 | -6.46 |
| abrdn Asia Focus (LSE:AAS) | Asia Pacific Smaller Companies | -3.86 | -16.75 |
| Fundsmith Emerging Equities Trust (LSE:FEET) | Global Emerging Markets | -3.54 | -6.02 |
Source: Morningstar. *Data from close of trading 13 October 2022 to close of trading 20 October 2022. Past performance is not a guide to future performance.
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.