In this week's Big Theme we highlight recent shifts in investment trust discounts and premiums to net asset value (NAV) in the Association of Investment Companies (AIC) UK Equity Income sector. Many of the trusts in this sector were on premiums due to investors searching for income amid low interest rates and bond market concerns, however these have now swung out to discounts.
- Rare discount to NAV
- Good long-term performance
- Low charge
- Possible downside mitigation
- Poor short-term performance
- Yield not as high as some peers
One of the more notable movers has been Temple Bar Investment Trust (TMPL). This had consistently traded at a premium since 2011, but this year has moved to a discount of more than 5 per cent. There is a good reason for this, as well as the sector trend: the trust has struggled over the past 18 months, and so failed to beat its sector average and the FTSE All-Share over one year.