Good managers often run a number of funds so it is a good idea to access them via the one that incurs the lowest costs. When this is an investment trust, it can also make sense to buy it when its shares are trading on a wider than average discount to net asset value (NAV).
Strong long-term returns
Good manager record
Relatively wide discount to NAV
Ability to vary UK exposure
Volatility
A current example of this is Law Debenture Corporation (LWDB) run by James Henderson, who over the years has made very strong returns with his funds. This trust is trading at a discount to NAV of about 12 per cent but has often traded at much tighter levels, and at times a premium. It has a strong long-term performance record but recently its share price has not kept up with its NAV. Reasons for this include the trust's substantial weighting to the UK, which is out of favour with global investors. and low exposure to the US. "As a contrarian investor with a focus on value, Mr Henderson has moderately increased the allocation to the UK," explain analysts at research company Edison. "US exposure has been gradually reduced on the back of strong performance, as he says it is increasingly hard to find value there."