by Faith Glasgow for interactive investor, 7th August 2023:
Most major markets rose in July, as did hopes that a US recession can be averted, while better-than-expected inflation news provided a welcome fillip for interest-rate sensitive sectors of the investment trust world such as infrastructure and growth capital.
Investment trust discounts have therefore tended to narrow somewhat over recent weeks. However, that’s not a universal trend, and opportunities remain for investors seeking funds with portfolios that have performed robustly over the past year yet still trade at wide discounts to net asset value…
At QuotedData, analyst David Johnson likes JLEN Environmental Assets, a trust that invests in environmental infrastructure projects generating index-linked cash flows and supporting the transition to a low carbon economy.
JLEN has returned around 6% over the last 12 months to end July, but its discount to NAV has widened significantly, and now sits at -15.9%. “This compares to an average discount over the past 12 months of -3.4% and a 12-month high of +8.3% (a premium),” points out Johnson…
Also at QuotedData, Andrew Courtney picks out GCP Infrastructure, which has a UK focus, investing predominantly in infrastructure projects with long-term public sector-backed revenues.
Shares have fallen by 29% over the year and the discount now sits at 30.4%. Yet It has achieved NAV returns of 4.4% during that time, benefiting from the fact that almost half its assets have some form of inflation protection.
“There appears little to justify such an extreme discount given the fund’s ongoing execution, and with thematic tailwinds (a focus on renewable electricity assets) driving long-term cashflows, it is only a matter of time before its dividend of over 8% begins to attract attention once again, particularly if inflation continues to trend lower,” Courtney comments.
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