A shortlist of the best-performing investment companies trading on discounts of more than 10% mostly reside in the technology, private equity, and Vietnam sectors year to date, according to data from the Association of Investment Companies (AIC).
The trade body’s list of the top 20 investment companies trading on double-digit discounts include the likes of Allianz Technology trust, India Capital Growth and Polar Capital Technology. On average, investment companies on the list are trading at a 16% discount to their net asset value, a widening of 4 percentage points compared to the same time period last year.
Annabel Brodie-Smith, communications director at the AIC, said: “Investment trust discounts have widened since early 2022 due to rising interest rates and difficult markets. There’s now an enticing selection of investment trusts which have performed well over the long term and are trading on double-digit discounts.”
Trusts in the private equity sector appeared most frequently on the list, accounting for eight of the 20 featured companies. Six of those are currently trading at a discount of more than 30%, including NB Private Equity Partners, HarbourVest Global Private Equity, CT Private Equity Trust, and Abrdn Private Equity Opportunities.
Allianz Technology Trust is listed as the top fund, currently trading at a 13.5% discount. Over the past ten years, the fund has returned 395.6%. While the fund suffered a dip in performance in 2022, its NAV largely recovered by 2023.
Mike Seidenberg, portfolio manager of Allianz Technology Trust, said: “We are arguably living in the golden era of technology where companies become relevant or irrelevant depending on their adoption and use of technology.
“Identifying companies solving some of the most difficult problems – such as global warming or access to information – is what we aim to do at the Allianz Technology Trust. Our team-oriented approach has identified secular themes over the past decade, and through a rigorous investment process, whereby we identify the risks and rewards of technology companies for shareholders, our goal is to do so going forward.”
India Capital Growth secured the second spot in the rankings, trading at a 13.5% discount and hitting almost the same return as Allianz, at 390.5%.
Gaurav Narain, manager of India Capital Growth, said: “The digital transition has impacted the whole country, mainstreaming the rural population and enabling a more efficient economy.
“With an increasing proportion of the population moving up the wealth ladder to a point of greater consumption, a theme that has been and will remain central to the portfolio, we believe the opportunity in small and mid-sized companies remains strong with plenty of room to grow.”
Polar Capital Technology also made the top three after it ended its fiscal year in April with a net asset value decrease of 7.3%. Currently, shares are trading at an 11.3% discount, while its return over ten years sits at 390.5%.
Ben Rogoff, lead manager of Polar Capital Technology trust, said: “We believe we have reached an inflection point in both the capabilities and adoption of artificial intelligence. We are at the starting point of another secular cycle of technology-led disruption, which could have a greater economic impact than the internet, mobile and cloud transitions before it.”
While discounts are sometimes an excellent opportunity for investors willing to take a risk, Brodie-Smith said the bets do not always pay off.
“Investors shouldn’t rely on discounts when researching investment trusts. It’s vital that they look under the bonnet and understand why a company is trading at a discount to its assets and why that discount might narrow. They also need to consider all the factors which make up the investment case, including performance, portfolio, charges and gearing.”
Top performing investment companies over ten years with double-digit discounts
|Company name||AIC sector||Share price total return % 1 year||Share price total return % 3 years||Share price total return % 5 years||Share price total return % 10 years||Discount %|
|All investment companies||Industry ex VCTs||1.8||13.9||74.1||140.0||-16.1|
|Allianz Technology Trust||Technology & Technology Innovation||11.4||-5.6||79.5||395.6||-13.5|
|India Capital Growth Fund||India/Indian Subcontinent||29.8||117.9||89.8||390.5||-11.3|
|Polar Capital Technology||Technology & Technology Innovation||13.4||0.5||79.9||366.3||-14.2|
|HgCapital Trust||Private Equity||10.2||35.0||109.9||351.5||-22.1|
|NB Private Equity Partners||Private Equity||2.6||69.7||75.2||321.8||-30.5|
|VietNam Holding||Country Specialist||14.2||95.8||51.8||295.2||-14.1|
|VinaCapital Vietnam Opp Fund||Country Specialist||2.5||45.4||57.3||288.1||-21.1|
|HarbourVest Global Private Equity||Private Equity||-3.2||24.6||54.4||246.5||-47.3|
|CT Private Equity Trust||Private Equity||17.2||80.6||65.2||230.5||-36.0|
|Alpha Real Trust||Property – Debt||-3.7||-13.7||5.9||230.5||-40.6|
|Pacific Horizon||Asia Pacific||-3.6||-16.6||79.2||225.2||-11.7|
|Dunedin Enterprise||Private Equity||16.6||118.4||100.2||222.8||-15.6|
|Oryx International Growth||UK Smaller Companies||12.7||-1.8||31.1||213.2||-33.6|
|abrdn Private Equity Opportunities||Private Equity||8.7||51.7||50.4||204.6||-44.4|
|Oakley Capital Investments||Private Equity||13.6||70.9||148.2||189.3||-36.0|
|Canadian General Investments||North America||15.1||27.4||61.7||179.0||-36.4|
|Pantheon International||Private Equity||19.0||39.8||40.1||178.6||-38.1|