Should You Buy Investment Trusts on a Discount?

Investment trusts at a discount may look tempting, but potential investors should do their research on the managers before buying

Holly Black 26 September, 2018 | 10:17AM
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Rising value investments

Investment trusts are often seen as a more complicated vehicle than open-ended funds. One of the main reasons for this is their ability to trade at a premium or discount to their net asset value – but investors who make the right call could use this feature to significantly boost their returns.

If you buy a trust when it is trading at a discount of, say 10%, and this closes to the point the trust is trading at par then you have made 10% on your investment before even factoring in any capital growth or dividend. This is simply because buyers are now willing to pay more than you did for the shares.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Fidelity Japan Trust Ord240.02 GBP0.85Rating
Global Resources IT Ord1.55 GBP0.00Rating
JPMorgan Emerging Markets Ord126.20 GBP-0.47Rating
Monks Ord1,336.11 GBP-0.88Rating
Premier Miton Glb Renewables Trust Ord196.00 GBP0.00
Schroder UK Public Private Trust Ord31.42 GBP-4.50Rating

About Author

Holly Black  is Senior Editor,