by Faith Glasgow from interactive investor, 25th September 2023:
The investment trust sector has not had it easy over the 20 months or so, as rocketing inflation and ongoing interest rate hikes have depressed growth prospects and stifled investor demand for risk assets across the board.
The downbeat economic outlook has left most investment trusts – even those whose popularity ensures their share price is normally trading on a premium…
Perhaps the most obvious equity bargain, currently being highlighted by broker Winterflood on its ‘cheap’ list, is Lindsell Train IT…
LTI has an impressive long-term record, with total returns averaging 16.3% per year over the 15 years since the financial crisis – better than any non-technology-focused trust, according to QuotedData’s senior analyst Matthew Read.
“It has attracted a strong following and has frequently traded at a premium to NAV,” says Read. However, a significant part of LTI’s NAV is its unlisted holding in the eponymous management company…
Another equity-focused opportunity is the UK large-cap trust Shires Income, currently trading on a -8.7% discount versus a one-year average of 2.9%.
As Read explains, this abrdn trust has done well on the back of its high-income focus, with dividend income boosted by a portfolio of preference shares and other fixed-income securities, while capital and dividend growth is bolstered by some lower-yielding equities…
Many of the popular income-generating alternatives trusts have been particularly hard hit, as savings and fixed-income alternatives have gained popularity. Notably, utilities and infrastructure have suffered as interest rates have risen, particularly given their long-term perspective.
Among the infrastructure-focused sectors, Read highlights Ecofin Global Utilities & Infra, which aims to pay a 4% annual dividend, delivered quarterly, and to provide both long-term growth and capital preservation.
Read more here