by Sam Benstead from interactive investor, 2nd August 2023:
Wide investment trust discounts are making them appealing takeover targets, with rumoured or confirmed deals likely to lead to sudden share price jumps…
Discounts have widened due to negative sentiment about the economy, and therefore private company valuations, but also due to the impact of higher interest rates.
When rates rise, so do yields on bonds. Higher bond yields make some alternative investments less appealing as investors can get an income from bonds, and no longer have to stray into complex and expensive areas.
Which trusts could be targets?
Trusts that invest in illiquid assets are likely to be targeted, with Numis saying the property sector is likely to continue being targeted…
James Carthew, head of investment trust research at research group QuotedData, says that Balanced Commercial Property, where there is a £342 million gap between the NAV and the market cap, could be a target.
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