by Kyle Caldwell from interactive investor, 31st July 2024:
For about 18 months, there’s been no shortage of investment trust bargain opportunities, with the average trust discount typically trading at around -15%..
For this article, we asked QuotedData, the investment trust analyst, to crunch the numbers to reveal which trusts have bucked the trend and seen their discounts narrow over the past year.
The top 20 “discount decliners” feature investment trusts that, a year ago, were notably out of favour because their investment style, asset class, region, or indeed all three, had been hit by rising interest rates..
There are other factors at play on a case-by-case basis, according to James Carthew, head of investment companies at QuotedData.
Carthew says that Hipgnosis Songs (LSE:SONG), which tops the table after its discount narrowed from -46.4% to trade at a 5.7% premium, enjoyed a share price boost after a bidding war broke out.
Tritax EuroBox, in third place in the table, has also been attracting potential suitors.
Second in the table is the Baillie Gifford-managed Schiehallion, which may have benefited from positive news stories about SpaceX, says Carthew..
Two others from the Baillie Gifford stable make the table: Edinburgh Worldwide and Scottish Mortgage. Over a one-year period, the former as seen its discount narrow from -20.8% to -8.3%, while the latter’s discount has reduced from -17.9% to -8.9%..
Carthew says that in the case of Edinburgh Worldwide “small cap and growth have both been out of favour, but there are tentative signs that this is changing”. Edinburgh Worldwide also owns SpaceX, which is its top holding, with a 11.8% weighting..
Carthew points out that despite these 20 trusts seeing their discounts narrow the most over the past year, there are still some potential bargains.
He describes a -42% discount for Seraphim Space Investment Trust as being “way too wide”..
Tufton Oceanic Assets and Patria Private Equity Trust are also seen by Carthew as potentially offering more discount value.
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