The discount to net asset value (NAV) of the share price of the average investment trust has, according to Winterflood Securities, risen from barely 1% at the start of this year to 12.5%, having exceeded 15% in October. It might be assumed that the biggest victims would be smaller, less liquid trusts, those with poor investment performance, those with high borrowings or those with low dividend yields. But according to research by William Heathcoat Amory of Kepler Partners, the losers have included those with the best investment performances last year, those that have performed well this year and those with generous yields.
This is partly because investors distrust the valuations ascribed to unquoted investments, which include not just private equity but also infrastructure, renewable energy, property and other alternative assets. It also reflects the saturation of investors’ appetites by funds that have been prolific issuers of equity in recent years. Where these two factors collide, share prices have gone from large premiums to NAV (enabling share issuance) to
