How to navigate narrowing investment trust discounts

Average rate hit nearly 1.5% in May

In an environment of continued macroeconomic and political uncertainty, it might seem odd that investment company discounts have approached multi-year lows in recent weeks, writes Sarah Godfrey, investment companies analyst at Edison Group.

According to data from Morningstar, the average discount for all investment companies (excluding VCTs and 3i) reached 1.44% on 1 May 2019, although it has since widened again to around 3%. While some fell way below the all-time narrowest average of 0.59% - reached in December 2017 as the FTSE 100 approached its highest-ever level after a year of historically low stock market volatility - the average discount has rarely breached the 2% barrier, as shown in the chart below. interactive investor: 'Discount opportunists' are piling into Woodford Patient Capital Of course, an average in...