A cheap investment trust with a good record

This cheap investment trust’s yield of almost 9% may look too good to be true, but should be sustainable, says Max King.

Confronted with an investment trust yielding 8.7% and trading at a 26% discount to net asset value (NAV), most experienced investors would assume that there was something wrong with it. Was the dividend about to be cut? Were the assets wrongly valued? Were the shares highly illiquid? Or maybe all three?

On being told that the investment return of the trust in question, which had unleveraged assets (ie, no borrowings) of £350m, was up 41% over one year, 89% over three years and 102% over five years, the same investor might mutter something about it being “too good to be true”.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.