Investment trust insider on the loss of good funds – James Carthew: Too many good funds are throwing in the towel
Share price discounts have been widening across the investment companies’ sector. Incredibly, just 20 of 337 closed-end funds that I follow were trading at a premium to net asset value (NAV) at the end of August. No wonder new issuance has stalled.
For many investment companies, these discounts are a new phenomenon. I have been pleased by how many have stepped up and are trying to tackle the problem – the wave of share buyback programmes instituted over 2023 demonstrates that. However, last month the situation just appeared to get worse.
It would be easy to lose heart in the face of this, but my gut feeling is that the pessimism has been overdone and, in a couple of years, we will look back at some of the current bargains on offer today and curse ourselves for not taking advantage of them.
Last week, I highlighted the value opportunity in the renewable energy sector. Here, it is possible to lock in yields of 7%-9% from trusts growing their dividends and operating in areas where there is vast demand for capital and cashflows are predictable.
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