That investors can be wary of private equity (PE) is a well-established fact. Despite a rally last year, PE trusts are among the most heavily discounted investment companies in London – and for many that has been the case not just since base rates started to rise, but ever since the financial crisis. At the same time, these vehicles are sizeable, and home to some of the largest net asset value (NAV) per share figures around.
Some might view the existence of a cohort trading on wide share price discounts to NAV as an anomaly that will right itself somewhat once rates fall and risk appetites return. Perhaps more puzzling in the immediate term is the presence of a handful of “flexible” investment trusts among the group on the biggest discounts. Trusts in the flexible sector are effectively multi-asset funds, a status that often indicates a defensive approach. Beyond this loose guiding principle, there’s not much that unites them. But the three biggest do have one thing in common.
Caledonia Investments (CLDN), Tetragon Financial Group (TFG) and RIT Capital Partners (RCP) all boast NAV per share figures of more than 2,000p – placing them in the top 5 per cent of trusts in value terms.