Should You Ever Buy an Investment Trust at a Premium?

Investment trusts on hefty premiums might pay a decent income, but investors may do better to look for bargain trusts trading at a discount

Holly Black 29 May, 2019 | 2:54PM

Investment chart

When investment trusts are in demand their price goes up – but is it ever worth paying over the odds to invest in a top trust?

At least 38 investment trusts are trading at a premium of 4% or more to their net asset value, according to Morningstar data. Typically, trusts trade at a premium when they are firmly in favour with investors – this can be for any number of reasons: the region or sector the trust focuses on may be in fashion, the trust may pay a higher-than-average income, be run by a well-rated manager or have had a strong run of performance. 

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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.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
3i Ord863.40 GBX3.60
Amedeo Air Four Plus34.00 GBX0.00
Baillie Gifford Shin Nippon Ord193.40 GBX1.68
Bluefield Solar Income Fund130.00 GBX-1.14
Doric Nimrod Air Three Ord35.00 GBX0.00
Doric Nimrod Air Two Ord63.00 GBX0.00
Greencoat UK Wind144.00 GBX0.28
Hannan Metals Ltd0.40 CAD2.60
Hansa Trust Ord161.00 GBX0.63
Lindsell Train Ord1,230.00 GBP0.00
LMS Capital Ord32.70 GBX-0.30
New Star Investment Trust Ord106.50 GBX0.47
NextEnergy Solar Ord108.00 GBX0.75
RIT Capital Partners Ord1,830.00 GBX0.44

About Author

Holly Black  is Senior Editor, Morningstar.co.uk

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