Discount Delver: the 10 cheapest trusts on 15 November 2024

Investment trusts, due to their closed-ended structure, offer investors the chance of picking up a potential bargain. Such an opportunity arises when a trust’s share price is lower than the underlying investments held by the trust (the net asset value, or NAV).   

However, a trust trading on a discount to NAV is not necessarily a buying opportunity. There’s likely a good reason why the trust is cheap, such as subdued short- or long-term performance, or poor investor sentiment towards how it invests.   

• Invest with ii: What is a Managed ISA? | Open a Managed ISA | Transfer an ISA

In our weekly series, interactive investor highlights the 10 biggest investment trust discount moves over the past week.

In total, nearly 400 investment trusts have been screened, with the data sourced from Morningstar. Venture Capital Trusts (VCTs) have been excluded. We also strip out trusts with less than £20 million in assets and those that are not available on the interactive investor platform. 

• Sign up to our free newsletter for share, fund and trust ideas, and the latest news and analysis
• Top-performing fund, investment trust and ETF data: November 2024

Shortly before interest rates started rising, there were a flurry of investment trust launches in specialist areas, from digital infrastructure and renewable energy to space initiatives.

However, in most cases performance has been weak owing to rate rises. With higher rates comes more interest on cash accounts and higher bond yields. As a result, investors can pick up good levels of income without taking on any, or much, risk. As a result, higher-risk specialist strategies have been out of favour, causing discounts to widen.

One example is HydrogenOne Capital Growth (LSE:HGEN). Since IPO in July 2021, its share price is down 75.5%. Its discount is -75.7%, having increased by 13 percentage points over the past week.

Four other trusts from the renewable energy infrastructure sector make this week’s table: Foresight Environmental Infrastructure (LSE:FGEN), Bluefield Solar Income Fund (LSE:BSIF), Greencoat Renewables (LSE:GRP), and SDCL Energy Efficiency Income (LSE:SEIT). There's also Premier Miton Global Renewables Trust (LSE:PMGR), which sits in the broader infrastructure sector.

Such investment trusts offer eye-catching yields of around 7% to 8%, but it appears that investors are still shying away due to yields of 4% to 5% being available elsewhere for much lower risk.

Source: Morningstar. *Data from close of trading 7 November 2024 to close of trading 14 November 2024.