Analysis: it’s been a terrible six months for investment trusts

The first half of the year has not been kind to investment trusts because of their skew towards growth stocks and the global downturn, says Max King. But they will recover.

Mining dump trucks
The resources sector was the bright spot, but its fortunes turned when commodity prices peaked
(Image credit: © Oliver Llaneza Hesse/Construction Photography/Avalon/Getty Images)

It has been a terrible six months for investment trusts. The FTSE All Share Closed End Investments index slumped by 18.9% compared with a fall of 4.6% for the FTSE All-Share index. Compared with global equities, the performance is better as the MSCI All Countries World index lost 11% in sterling. With the average discount to net asset value (NAV) in the sector widening to 9.8% from 1.5%, the underlying assets performed broadly in line with global equities.

After a stunning 2020, 2021 hadn’t been a great year, with the Closed End Investments index returning 12.8%, compared with 19.6% for the MSCI index. That was despite a fall in average discounts, but this year it seems that investors are losing faith in the investment-trust structure.

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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.