Less than one-fifth of smaller investment trusts trading on a premium

Wealth managers reveal liquidity restrictions

Large wealth managers’ hesitancy to invest in less liquid investment companies means companies that have a market cap of less than £250m are more likely to be trading on a discount, according to figures from the Association of Investment Companies (AIC) for Investment Week.

The figures show that just 18% of the 159 companies that have a market cap of less than £250m are trading on a premium, compared to 41% of the 187 companies that are £250m or larger. Laith Khalaf, financial analyst at AJ Bell, explained: "There will be a premium put on some investment trusts because of their size and therefore their liquidity. "Large discretionary managers will potentially need to add any selected trusts across a range of client portfolios, which means potentially large flows of money which would ramp up the share price of smaller trusts, or in some extreme cases migh...