Disclaimer
This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. This material should be considered as general market commentary.
Picture a bustling British high street during a Boxing Day sale. Shoppers eagerly queue for bargains, drawn by the irresistible allure of a good deal. It’s quintessentially British to love a discount—whether it’s a half-price Greggs sausage roll or the Black Friday sale frenzy borrowed from the US. This passion for bargains extends beyond the aisles and into the world of investing. Here, discounts on investment trusts evoke a similar thrill: the opportunity to buy £100 of assets for £80. Who could resist?
But, as with any sale, not all bargains are created equal. Discounted trusts can offer significant upside if their share prices recover, but they also can signal significant risks. This raises a question: has investing in the most discounted trusts over the years been an effective strategy for delivering meaningful returns? In pursuit of this answer, we dove headfirst into the bottomless well of data, beginning with a broad analysis of how discounts in the investment trust universe behave during market cycles, before looking at those trading on the very widest discounts.
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