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Falling at the first hurdle

Cherry Reynard, Trustnet Magazine, 20 December 2022:

There was widespread optimism in the world of investment trusts at the start of 2022…

However, as soon as Russia invaded Ukraine in February, all bets were off. This set off a chain of events, with disruption to commodity markets pushing up inflation, leading to higher interest rates and eventually feeding through to bond and equity market volatility…

There has been a dramatic widening of discount levels across the investment trust universe. The year started with an average figure of 2.4%, but this moved as high as 20%, before finishing at about 12%. Certain sectors, such as commercial property and private equity, have been hit particularly hard.

Winners and losers

The IT Leasing sector tops the performance table this year, up 18.4%, with its shipping trusts benefiting from supply-chain bottlenecks and its aircraft-leasing companies bouncing back from the damage caused by the pandemic…

Energy trusts have also been winners, with the likes of Riverstone Energy, CQS Natural Resources Growth and Income, Gresham House Energy Storage and BlackRock Energy & Resources Income registering strong gains…

Going their separate ways

There was a notable contrast between the two Asian behemoths of China and India. India had a strong year, fuelled by a strong economy, reform and benign inflation…

The year ahead

There are plenty of investment trusts now on appealing discounts…

James Carthew, head of investment company research at QuotedData, also believes private equity could hold opportunities: “Discounts keep getting wider and wider, yet in NAV terms, they have been the best performers over the year. If people get more comfortable with the NAVs, they could do well. We highlight HarbourVest Global Private Equity, trading on a 46% discount.”

Read more here

 

 

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