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The four cheap trusts for bargain-hunting investors

Trustnet looks at the investment trusts that are looking cheaper than usual in July.

By Rory Palmer, Reporter, Trustnet, 21 July 2021

Henderson Opportunities, Augmentum Fintech and BlackRock Energy and Resources were all significantly cheaper in June, according to QuotedData, and could represent good value for investors today.

When a trust trades at a discount or premium to its net asset value (NAV), its shares trade below or above the value of the underlying investments.

Changes like this can happen for a number of reasons, such as investor apathy towards a sector, a short-term sentiment change in the fund, or a strong surge by the underlying companies that have yet to be reflected by investors.

Trusts on a wide discount can act as a useful entry point for bargain-hunting investors, although a persistent discount to NAV can be a sign of long-term underperformance. The key is finding trusts that are cheap relative to their historical averages.

As such, with statistics from QuotedData, Trustnet looks at the investment trusts which have become cheaper relative to NAV over June.

The £31m Secured Income trust was on a 27% discount in the first week of July, after bad news about its film finance portfolio came to light. However, as of 20 July it is now at a premium of 5% after it bought back £3m worth of shares.

Next on the list is Augmentum Fintech, the £263m trust that invests in UK and European fintech companies. The portfolio is diversified across different areas including banking services, wealth and asset management, as well as fintech enablers.

The high premium of 22% dropped in June, although it still trades higher than its NAV at 7% today.

Jayna Rana, investment company analyst at QuotedData, said: “The company revealed excellent results for the year to 31 March 2021 while also sharing details of an amendment to its investment policy and plans to raise £40m at 135.5p – a 4% premium to the NAV at the time.”

 

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