Which trusts have managed their discounts the best?

With market turbulence increasing, Simon Elliott, head of research at Winterflood Securities, analyses how well investment companies are using discount control mechanisms to reduce volatility and ward off corporate activity.

Equity market conditions have become more volatile since June last year, with the FTSE All Share down 11% over the period. Despite this, discounts across the investment trust sector have actually narrowed, with the sector average discount at 4.7% at the end of December (excluding private equity, hedge funds and direct property funds). This compares with 5.7% at the end of 2014 and 5.6% at the start of June last year. Discount levels across the investment trust sector remain at historically narrow levels. This is a result of strong equity markets over the last few years, attractive ...