These trusts have seen their premiums vanish since the start of the year as growth shares lost ground.
Kyle Caldwell from interactive investor 17th February 2022:
Given all the volatility in the first six weeks of 2022, a surprising statistic is that the number of equity investment trusts trading on a premium to their net asset value (NAV) is virtually unchanged.
QuotedData, the investment trust analyst, supplied discount and premium data to interactive investor that shows there were 36 equity trusts trading on a premium on 11 February. At the start of the year, there were 38 out of a total of 178.
That’s not to say that there has been a lack of movement in discount and premium changes. Over the past couple of weeks, investment strategies that are expected to perform well or protect capital in a high inflation and rising interest rate environment have seen an uptick in investor demand, which has helped their discounts to narrow and some have moved to premiums. Examples include BlackRock World Mining Trust, Temple Bar, City of London and Utilico Emerging Markets.
BlackRock World Mining was trading on a discount of 5.5% at the start of the year, but on 11 February was on a small premium of 0.3%. James Carthew, head of research at QuotedData, says: “Stronger commodity prices are helping mining funds, and there is also a sense that the value of the commodities rises in line with inflation. Over the long term, this may work, but it isn’t guaranteed.”
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