3 Investment Trusts Warren Buffett Would Buy

Using mean reversion analysis, we have pinpointed solid investment trusts that are trading at wider-than-normal discounts

Szymon Idzikowski 26 October, 2012 | 10:27AM

Here at Morningstar we are not keen on short-term trading or investing purely on discount movements. However, we do appreciate Warren Buffett’s long-term value investment approach: buy good companies for cheap. This approach can also be applied to investment trusts: buy good trusts for cheap.

In this article I will introduce three investment trusts that are currently trading below their three-year average discount, indicating that they are being undervalued right now by the market. In our view, these investment trusts should outperform their category peers over the long term.

But before discussing the specific investment trusts, let’s discuss the important concept of “mean reversion”…

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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
Edinburgh Dragon Ord406.00 GBX0.74
Monks Ord1,138.00 GBX1.25
Templeton Emerging Markets UK Ord813.00 GBX-0.73

About Author

Szymon Idzikowski

Szymon Idzikowski  is a closed-end fund analyst with Morningstar.

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