by Dave Baxter, Investors’ Chronicle, April 12, 2024:
A recovery in the investment trust sector has faltered in the first quarter, leaving plenty of options for bargain hunters.
The lively market rally that took hold in late 2023 saw many trust shares ride high and discounts to net asset value (NAV) come in somewhat. That recovery has stalled more recently, however..
Bargain hunters eyeing up investment trust discounts might first wish to understand why they have widened yet again, and some are perplexed by the recent moves.
James Carthew, head of investment company research at QuotedData, said he was “increasingly struggling to rationalise” the persistence of such wide discounts, adding: “I can’t think why people would be selling investment companies now, especially on massive discounts.”..
Specialists have made the case for buying into such names, even just to collect dividend payments. “You can look at the yields [in the renewables sector] and think ‘I’ll just lock those away for another 10 years’,” Carthew said. He added that there was “no logic” to names such as NextEnergy Solar and SDCL Energy Efficiency Income (SEIT) trading on double-digit share price dividend yields, given that such payouts look well covered.
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