- Discount widening is still a risk
- Featured trusts positioned to grow income
Conditions aren’t what they were for investment trusts. The capacity to trade at a discount to net asset value (NAV) and potential to use gearing are great features in a low interest rate environment but debt and discounts can become a headache in an inflationary period with rising interest rates. Trusts are, however, still of use for dividends and harder to access investment opportunities.
The Alpha Investment Trust report system is based on finding trusts that are cheap relative to their history (based on the past level of share price discount/premium to NAV per share) yet also have positive three month share price momentum. This is a system that served it well in the era of cheap money and rising share prices - often trusts in hot sectors would see NAV rise by more than a generally positive share price rise and there were further momentum gains to be had as the discount closed.
