Disclosure – Non-substantive Research
This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour.
The accelerant effect of a closing discount adds considerable appeal to investment trusts for many investors, boosting the impact of a rising net asset value (NAV) when it happens, and leaving the shareholder with what is effectively a ‘geared’ return.
Identifying trusts which are trading in a discount to NAV which is likely to close is no mean feat, though, with more than 450 investment trusts to choose from – and typical discounts among conventional trusts around the 10% mark.
Last week the team at Kepler Trust Intelligence was joined by six fund managers for whom discounts are of material importance. The first, a lifelong discount ‘player’ who has made a career from identifying trusts which are trading on discounts that have the potential to close, the rest running investment trusts which, for one reason or another, are trading on wider discounts than they – or our analysts – believe represent fair value for their portfolios.
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