Email of the day on investment trust data
Comment of the Day

April 14 2020

Commentary by Eoin Treacy

Email of the day on investment trust data

I am following your features on investment trusts with interest. I was hoping to be able to locate ten year average discounts on the Association of Investment Trusts Website  . Unfortunately, the format has changed since I last looked at it several years ago. However, there is a wealth of information on the site including a section on Dividend Heroes as well as performance stats on individual trusts. Thank you for your efforts.

Eoin Treacy's view

Thanks for this informative email which I believe will be of interest to subscribers. The project I am currently working on is to create a comprehensive database of UK listed investment trusts which includes the number of years since their last dividend cut, dividend yields, discount to NAV and the 10-year average discount/premium to NAV. I’m about 75% complete. Once complete I will post the results on the site and envisage updating them monthly.

The reason for highlighting investment trusts is because they frequently trade at significant discounts to their assets which affords investors the opportunity to buy them for less than the market value of their assets. However, to make a determination as to whether a discount represents value it is necessary to have an idea of what is normal for that security since some investment trusts habitually trade at discounts either because of some mix of fees, leverage or illiquid assets. There is no easily accessible database of average discounts to NAV so I am creating one. I’m focusing on 10-year averages but since many do not have 10 years of history that is slowing down the process of building averages.

An additional limitation of the first list I provided is I relied on dividend growth data. There is a significant number of investment trusts which have paid static dividends for many years and did not feature on my initial list.

Personal Asset Trust has paid a 140p dividend every quarter since 2012 and hasn’t cut its dividend in 28 years. The fund is leveraged 128% and is currently at a premium of 3.78%. It invests in a portfolio of Autonomies.

Scottish Oriental Smaller Companies Trust is another example. It has paid an annual dividend of 11.5p every year since 2013 but has not cut the dividend sin 25 years. It is currently trading at a discount to NAV of 15% which is less than the average of 8%. The fund is 110% leveraged and focuses on food and snack brands in India, Singapore, Taiwan and Hong Kong.

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