Four top investment trusts overlooked by the market
Professional investors Charlotte Cuthbertson and Nick Greenwood of the MIGO Opportunities Trust pick four investment trusts that are trading at discounts to the value of their underlying investments.
The MIGO Opportunities Trust, previously known as Miton Global Opportunities, seeks to exploit mispricings in the investment-trust sector. Trusts’ share prices trade at the balance of supply and demand in the open market – this can differ dramatically from the value of the underlying portfolio.
We seek out investment trusts trading at a discount to the value of their underlying investments – or net asset value, NAV – and offering a catalyst for both a rerating in the share price and an appreciation in the portfolio. This “double whammy” can produce attractive returns, especially when a particular asset class returns from a period of being out of favour.
The new China
Covid-19 will be with us for a long time, so we’re looking for trusts that benefit from some of the trends accelerated by the pandemic. Vietnam is profiting as firms diversify manufacturing and supply chains away from China. The trend has brought about increased urbanisation and a growing middle class in Vietnam; an extensive infrastructure plan by the government should stimulate further growth.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
![https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg](https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748-320-80.jpg)
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
We hold the Vinacapital Vietnam Opportunity Fund (LSE: VOF) and Vietnam Enterprise Investments (LSE: VEIL), both of which have excellent management teams and complement each other, with the former’s focus on private equity and the latter’s on public markets. These trusts trade on very wide discounts, a legacy of oversupply given the vast sums raised by Vietnamese funds in the noughties. We expect demand to rise as the positive view about Vietnam gains greater acceptance, while both trusts are shrinking supply through share buybacks.
A cheap inflation hedge
The Baker Steel Resources Trust (LSE: BSRT), which develops mining projects, is on a double-digit discount to NAV. It controls several interesting projects that could be ripe for selling or listing. One recent flotation, a tungsten mine in Devon, gave the trust’s valuation a welcome fillip. It has struggled to monetise its holdings during the pandemic: due diligence has been difficult for geologists owing to travel restrictions.
The trust focuses on metals that will be used in the electrification of the global economy. Moreover, it consists of a portfolio of real assets, which should temper concern over inflation. For now, mining finance remains heavily out of favour as the Chinese economy slows.
Georgia on our minds
We seek out unloved and overlooked situations where an investment has fallen below the radar. One such example is Georgia Capital (LSE: CGEO), which focuses on the Eastern European country. Its shares currently trade at around half of the latest valuation of its underlying portfolio.
This seems to be due to complete lack of interest at a time when many frontier-market specialist finds are shutting their doors. As a result, there seems to have been constant selling of Georgia Capital’s shares over the past few mo
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Revolut finally bags a UK banking licence – what's next for the fintech?
Revolut has finally been granted a UK banking licence following three years of negotiations with the regulator
By Kalpana Fitzpatrick Published
-
Could Labour impose a “double death tax” of more than 50%?
Speculation is mounting that capital gains tax will be reformed in the Budget - and one option is to charge bereaved families the tax on top of inheritance tax. We explain how it could work
By Ruth Emery Published
-
UK mid-caps: an improving outlook
UK mid-caps have perked up and the rally may run further, but long-term investors should remain selective
By Cris Sholto Heaton Published
-
The tobacco industry is going smoke-free - how to profit from it
Tobacco companies have realised their traditional products are on the wane. But new opportunities have opened up – and should prove lucrative
By Rupert Hargreaves Published
-
Is it time to invest in creative industries?
Any industrial strategy should not overlook the creative industries, one of our top national assets
By David C. Stevenson Published
-
Is Mercia Asset Management set for success?
Mercia Asset Management helps the government fund smaller companies in Britain’s regions. Should you invest?
By Rupert Hargreaves Published
-
British stocks set for a boost
British stocks are due for a bounce as the UK looks more stable compared to many economies
By Alex Rankine Published
-
Ocado shares jump by a fifth
Ocado takes a turn for the better after attractive profit forecasts were announced
By Dr Matthew Partridge Published
-
The AI boom is on borrowed time
The hype around the AI boom could be on its way out – but why?
By Alex Rankine Published
-
Diploma: a blue-chip set for strong growth
Diploma, whose niche products include seals and fasteners, serves an array of growth markets. Should you invest?
By Dr Mike Tubbs Published