Before discounts blew wider in 2022, devotees of investment trusts did very well, with the unique closed-ended features playing a big role in the success. As the funds’ net asset values (NAV) grew, there were price gains to be had when trust shares re-rated upwards, plus in many cases they pay dividends above the market average.
Some trusts have continued to deliver NAV outperformance. It was, however, the goldilocks situation of winning fund strategies and low interest rates which made investment trusts such a smart product structure in last decade.
After a rocky couple of years for the investment companies sector, when might those halcyon days return? Well, geopolitics has already thrown another spanner in the works in 2026, but there are still reasons not to despair: the consensus view remains we should see lower interest rates and yet moderate economic growth. Although, the tail-risks are fattening, this positive baseline would be supportive of equity markets generally and stronger investment trusts’ discounts narrow.
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