Hawksmoor's Ben Conway: Investment trust discounts do matter

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We have both read and heard (via conversations with boards and brokers and other stakeholders), with increasing alarm, the view that “discounts do not matter”, or are “less important than Saba Capital has made out”, or that (current) “shareholders do not mind”, or some variant of that sentiment.

I am afraid we unequivocally believe discounts absolutely do matter, and the kind of thinking that does not place enough importance on them is outright dangerous and undermines the long-term health of the sector. It is undeniably true that net asset value (NAV) returns over time often dwarf potential gains from narrowing discounts (or losses of widening discounts). It is also true that discount volatility is even more harmful than the presence of a discount. 'Shift' in Saba strategy shows quest for 'small, quick win' However, as we have repeatedly bemoaned – especially when disc...