by Faith Glasgow, from interactive investor, 31st October 2022:
This year’s market turbulence, culminating in the vigorous response to the previous chancellor’s mini-budget in September, has hit investment trusts painfully.
The FTSE All Share Closed End Investment index is down around 20% year-to- date, compared with the FTSE All-Share, which has lost around 10%.
According to the latest Winterflood monthly investment trust review, 79% of investment trusts were in negative territory for the year as of the end of September, and the average share price discount to net asset value (NAV) had slid to 14%, compared with just 2.1% at the end of 2021.
But while bargain hunters may now be eyeing the many high-quality funds currently sitting on rare and substantial discounts, it would be a mistake to assume that the entire closed-ended universe is now super-cheap. So where are the tight discounts and premiums lingering, and what’s underpinning them?
Top of the (pretty short) premium table at the moment is CQS New City High Yield, which is on a 7.3% premium versus a one-year average premium of 5.6%, according to Numis data for 31 October. “A large part of the attraction is its yield – 8.3% currently,” observes James Carthew, head of investment companies at QuotedData.
Additionally, the manager’s focus on capital preservation means it has also held up better than many of its peers in the AIC’s debt loans and bonds sector, with an NAV return of 0% over the past 12 months.
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