Investment trust insider looks back at 2024

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Investment trust insider looks back at 2024 – James Carthew: Shrinking trusts provide multiple opportunities

Share price discounts remain stubbornly wide despite a huge number of buybacks and corporation actions in 2024. Nevertheless, there have been some big winners this year.

This year has seen the investment companies sector shrink as boards have made big efforts to narrow discounts.

Given the sheer amount of buybacks, mergers, liquidations, managed wind-downs and the like, it is a shame that at 12 December share prices stood at a median discount of 13.9% below net asset value (NAV). That was wider than the median discount of 12.8% at the end of 2023.

As a result, despite positive investment returns overall, the market capitalisation of the sector has fallen from £178.9bn to about £174.3bn, and the number of listed funds has reduced to 299 from 326.

It would be easy to get disheartened, but my gut says that the Budget-related sell-off marked a low point for the sector and that investors will take a more rational look at the value on offer as we go into 2025.

In share price performance terms, some clear winners and losers stand out. Regional Reit’s (RGL) scramble to shore up its balance sheet puts it close to the bottom of the league tables. However, the list of losers is dominated by the renewable energy trusts, particularly the energy storage funds.

The well-documented problems in generating revenue from GB-based battery storage dealt a significant blow to these funds. As they seemed convinced that the problem was going to be temporary, I was surprised that we did not get a bid for one of them, but then Harmony Energy Income Trust (HEIT) decided to sell off its assets anyway.

That process should…   read more here