Share buybacks from investment trusts rose by almost a third in the first six months of 2025 compared to the same period last year, according to the Association of Investment Companies (AIC).
Share buybacks – excluding tender offers and redemptions – totalled £4.7 billion during the first half of 2025 - 32% higher than the equivalent figure from 2024 (£3.62 billion).
“Boards have been engaging with shareholders and considering all options to maximise value,” said Richard Stone, chief executive, AIC. “We have seen 19 fee changes to benefit shareholders in the past six months.”
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The first half of the year also saw a “whirlwind” of corporate activity for investment trusts, with two mergers, four acquisitions and 11 liquidations – compared to nine in total across all three categories during the same period last year.
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Share buybacks have gone hand-in-hand with widening investment trust discounts over the last three years. Due to their closed-ended structure, investment trusts are one of the most popular fund wrappers for investing in long-term, capital-intensive projects, like renewable energy infrastructure or venture capital. These kinds of investments tend to be highly rates-sensitive.
As interest rates rose in 2022, discounts – the discrepancy between the value of an investment trust’s outstanding shares and the total value of all its assets (net asset value, or 'NAV') – widened, and have remained in double digits ever since.
“This led to record share buy backs which have been increasing every year since 2022,” said Annabel Brodie-Smith, communications director, AIC. “This year, discounts have started to narrow and there will be a number of reasons for this – markets improving, rates starting to come down – but buybacks, mergers and proactive measures from boards have also had an impact.”
Investment trust discounts are narrowing
Investment trust discounts also narrowed during the first half of 2025. While the average investment trust still trades at a double digit discount, the size of this average discount fell by 1.5 percentage points over the last six months.
“A small move, but a welcome one,” said Nick Britton, research director at the AIC.
Discounts narrowed in 29 of the investment trust sectors that the AIC tracks, and have only widened in seven.
“Corporate activity has been a big driver of this,” said Britton. “The sector where discounts have narrowed the most is Property – UK Commercial, where the discount has closed from 24% to 15%.” Residential property-focused trusts have also seen a significant narrowing from 21% to 12%.
Trusts in these sectors have been the target of takeover bids, such as Warehouse REIT, or have announced strategic reviews (such as Life Science REIT).
It’s not uncommon for investment trusts to trade at discounts because of complexities in valuing their assets and the implicit costs of winding up a trust and returning all the capital to shareholders – but persistent double digit discounts like the sector is currently experiencing are relatively rare.
Steep discounts potentially offer a buying opportunity for investors who want a relatively cheap entry point for a particular sector or asset class.
“We’ve been saying for a while that deep discounts can’t last forever – some combination of improving sentiment and M&A will narrow them eventually,” said Britton. “We’re well into this process, but with the average industry discount still in double figures, there is still some way to go – and potentially, more money to be made by bargain hunters.”
Investment trust corporate activity
Mergers
The two investment trust mergers that took place in H1 2025 saw the Invesco Asia Trust merge with Aberdeen’s Asia Dragon Trust, to form the Invesco Asia Dragon Trust (LON:IAD) in February.
That was followed in May by the merger between JPMorgan Global Growth & Income and Henderson International Income. The continuing trust retained the JPMorgan Global Growth & Income (LON:JGGI) name.
Acquisitions and management changes
May saw Care REIT acquired by CareTrust REIT, a US-based trust entering the UK market, for $840.5 million.
This was followed by three acquisitions in June: BBGI Global Infrastructure was bought by Boswell Holdings, Harmony Energy Income was acquired by PP Bidco (Foresight), and Urban Logistics REIT was bought by LondonMetric Property.
There were also changes in management for Triple Point Social Housing REIT, which became Social Housing REIT (LON:SOHO) after switching from Triple Point Investment Management to Atrato Partners in January, and Invesco Perpetual UK Smaller Companies which changed from Invesco to Artemis in March to become Artemis UK Future Leaders (LON:AFL).
Liquidations
There was further consolidation in the investment trust space during the first half of the year through the liquidation of 11 trusts.
Of these, 10 took place during the first quarter. Two of the liquidated trusts – Henderson Opportunities and Keystone Positive Change – were among the ‘Saba seven’ investment trusts whose boards New York hedge fund and activist investor Saba Capital attempted, unsuccessfully, to have replaced.
“Clearly, this year Saba have been an influence,” said Brodie-Smith, “but the industry has been proactive when it comes to buybacks, mergers and other activity for the last couple of years.
“A number of the Saba-targeted trusts have this year conducted tender offers, which are effectively large-scale buybacks,” she added.
