- Infrastructure trusts staged a partial recovery in November
- Will it hold?
Infrastructure trusts have seen their average discounts to net asset value (NAV) narrow in the past month, as the decline of government bond yields brought some good news for the sector. But not all the trusts recovered to the same degree, overall discounts remain wide and the sector’s immediate future still looks uncertain.
The average weighted discounts for the Association of Investment Companies’ (AIC) infrastructure and renewable energy sectors decreased by 6.6 and 5.8 percentage points respectively between the end of October and 8 December – from 23.3 per cent to 16.7 per cent for infrastructure and from 24.5 per cent to 18.7 per cent for renewable energy. Over the same period, UK 10-year gilt yields reduced from about 4.5 per cent to 4 per cent, highlighting just how correlated infrastructure trusts have proved to be to interest rates.