By Matteo Anelli, 18 March 2024, Senior reporter, Trustnet:
Discount opportunities abound in the investment trusts universe, where 31% of portfolios with at least a five-year track record are now trading at double-digit discounts.
But that doesn’t mean that all of them make a great investment opportunity and discerning between the good and the bad can be complicated.
For investors that need a steer, Trustnet asked QuotedData analyst David Johnson to highlight one cheap trust in each developed market that he believes would make a good addition to investors’ portfolios today.
In the UK, Johnson opted for the £216m Montanaro UK Smaller Companies, which mainly invests in companies with a market capitalisation of between £250m and £500m (making up 27% of the portfolio) and £2bn or more (24%), particularly in the industrial and technology sectors..
For US exposure, Baillie Gifford US Growth is “a natural choice”. The trust beat the S&P 500 index by seven percentage points over the past year, as shown below..
In Europe, Henderson Eurotrust’s 13% discount is “a compelling opportunity” when compared to the other trusts in the two European sectors..
Finally, the Japanese equity sector is “a bit tricker to find discount opportunities in because of the consistently strong performances of many of its constituents”, which all trade on narrow discounts..
The JPMorgan Japanese Investment Trust ticks all the boxes on the analyst’s checklist and is “a natural fit” for its strong bias to Japanese growth companies and its 8% discount.
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