Last week, four separate investment trusts handed in their notice, announcing they would be shuttering..
The number of investment trusts has fallen to its lowest level in years for a number of reasons, including high discounts, pressure on small trusts, and ongoing issues around cost disclosure..
With a total of ten mergers announced so far this year, far above the four last year and five in 2021 and 2022, more trusts are feeling the need to combine and get big to stay afloat..
All of the trusts also cited their discounts, which is a problem throughout the sector. Just 26 investment trusts on the market are trading at a premium, with their share prices sitting above the value of their underlying assets.
This is naturally pushing investors to question whether they might get more value by simply selling off the assets of the fund, getting back their full value rather than sitting on an average 14 per cent discount.
However, performance in the sector is picking up. The average trust’s share price is up more than 17 per cent in the last year, or 45 per cent over the last five..
“On the whole, I feel the rationalisation of the sector is healthy, after all the returns on three of these four funds have undoubtedly disappointed investors,” said James Carthew, head of investment company research at QuotedData.
“However, I believe that Gulf Investment along with Tritax EuroBox and Balanced Commercial Property Trust… may be missed in time. It would not surprise me if similar vehicles relaunched in a few years.”
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