The sharp increase in interest rates over the last year or so has provided a real headwind for the majority of investment trusts with many now available at a sizeable discount to NAV.
Funds and Investment Trusts
Last week’s surprise fall in UK inflation to 6.7% enabled the Bank of England to leave interest rates unchanged at 5.25% after 14 successive increases.
The recent acquisition of the Round Hill Music Royalty Fund by Alchemy Copyrights at a 67% premium to the share price has reignited interest in this unusual area of the markets.
ESG investment is increasing in popularity, particularly among younger investors. According to several polls and studies, these investors are even willing to lose some yield if they believe they’re running a more environmental, social and governance-friendly portfolio.
The uncertainty around the future path of interest rates has resulted in the majority of investment trusts that are sensitive to this area trading at a discount to their net asset value.
It has been a disappointing six months for the £1.3bn BlackRock World Mining, which saw its NAV decline by 7.1% in the first half of the year with the share price down 10.3%.
Nick Sudbury checks back in on this fund and the potential opportunity driven by its widening discount.
The easiest way to diversify your portfolio is to add overseas exposure using a global fund.
One of the few value funds to survive the decade or more of ultra-low interest rates is the £780m Temple Bar, which has recently released its interim accounts.
John Cornford gives his position on current goings on in the energy investment trusts field.