I'm a new investor, although I have a significant amount of money in my portfolio thanks to an inheritance. I am particularly drawn to investment trusts and wonder if I should monitor discounts and premiums to net asset value (NAV) on these before buying their shares, and, if so, how I would go about it.
Lorna S
You can see what discount or premium to NAV an investment trust is trading at via data providers such as Morningstar and FE Trustnet, or here on the IC website.
It is important to compare an investment trust’s discount or premium to its historical record, because this can help you decide whether it is expensive or cheap. For example, a trust may be at a discount, but is not relatively cheap if it usually trades at a wider discount. And even if it is trading on a premium, if this premium is lower than it usually is, it could be considered to be relatively cheap.