Investment trust discounts narrow in 2015

Stock-Market-FTSE-Stockmarket-700x450.jpgAverage investment trust discounts narrowed over 2015, reducing from 7.5 per cent to 6.6 per cent.

Research from QuotedData finds that investment companies in the UK listed space saw a narrowing of discounts across the past 12 months, despite a spike last year ahead of the general election in May.

An improving outlook for the UK economy saw the average discount on UK smaller companies trusts reduce from 14 per cent at the start of 2015 to 5 per cent at year end.

Continued weakness in commodity prices weighed on some sectors, with natural resources seeing the largest rise in discounts for the year. The sector went from a median 14.4 per cent discount at the end of 2014 to a 26.6 per cent discount at the end of 2015.

European property saw the largest rise over the year, with its discount narrowing by 13.4 percentage points, however, the sector remained at a heavy median 21 per cent discount at the end of 2015.

The popular Lindsell Train trust had one of the largest premiums at the end of the year, trading at a 26.5 per cent premium. Aurora Russia topped the list with a 62.7 per cent premium.

QuotedData research director James Carthew says: “The tightening of the median discount of investment companies over 2015 flags their growing popularity with investors and advisers. In particular, there is clear demand for those paying an attractive, consistent yield.

“The prospect of rising interest rates is playing on some investors’ minds but the weak start to the year has pushed back the timescale for interest rate rises in the UK at least.

“Over the very short-term, the median discount for European trusts has widened but Draghi’s statements earlier this month could help sentiment recover when markets stabilise.”