Eve Maddock-Jones, Investment Week, 05 October 2022:
Investment trusts have been pushed to the widest discounts in years due to the abnormally high levels of market volatility and uncertainty.
This includes not only closed-ended portfolios that have been running on a discount long-term, but portfolios that have historically run on significant premiums now being reduced.
With that, Investment Week asked a series of investment trust specialists which portfolios were worth picking up at a discount amid the market and macroeconomic uncertainty.
One region several experts picked from was the UK, despite the headache the government’s latest fiscal policy has caused there.
Dzmitry Lipski, head of fund research at interactive investor, said investment trust discounts “could still go wider” and “buying opportunities are better than they have been in some time”.
He said one of the most “compelling” opportunities was Henderson Smaller Companies, which is now on a 12.7% discount, according to the Association of Investment Companies…
Outside of the UK, Europe and Asia and private equity were popular areas.
On the latter, Lipski said it was not an obvious choice in a recessionary, high inflation environment but this can often be a “good entry point for investors with a long-term view”.
He said the current average discount in that space was 30%, but there may be a slight lag before the true valuations are clear, due to the unlisted nature of the portfolios…
Moving onto Europe and Juliet Schooling Latter, research director at FundCalibre. said that, like the UK, Europe was “unloved”.
She described the macroeconomic pictures as “less than positive”, owing to the Ukraine war and slow reaction of the ECB due to the “many different economic environments in its member countries”.
However, she said the region was “home to some world class companies” that sell products and services globally…
James Carthew, head of investment companies at QuotedData, was also bullish on Europe and recommended the Montanaro European Smaller Companies.
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