Oriel: trust discounts narrow as markets rise

Discounts across the entire investment trust universe narrowed significantly last year from an average 11.6% to 9.2% on the back of equity markets strengthening, according to research from Oriel Securities.

The UK Global Growth & Income sector’s discount narrowed from 7.1% to 1.2%, while unloved sectors such as Private Equity saw a pick-up in investor demand after its discount contracted from 39% to 25% in 2010. Iain Scouller, an analyst at Oriel, said discounts will not narrow at a similar rate this year, and warned they are more likely to widen. “There is a high correlation between equity markets going up and discounts narrowing, so equity markets’ strong performance last year has been a key driver,” said Scouller. “When discounts narrow it can be the tail end of a rally as it indic...