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Financial Times Guide to Investment Trusts by John C Baron

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3

The opportunities and risks of discounts

Better performance and cheaper fees are two powerful reasons why investment trusts should be favoured. But there is a host of other advantages (and some disadvantages) to these trusts which are largely ignored or misunderstood by both professional advisers and investors alike. The discount is chief among them.

Opportunities and risks

Buying something at a discount to its true value is a national pastime – we all love a bargain. Buying investments should be no different, yet the majority of investors do not take advantage of this generous offer from investment trusts.

As investors know, unlike open-ended funds, an investment trust’s share price can deviate from the net asset value (NAV) of the underlying ...

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