In recent years, the investment trust sector has endured a perfect storm not of its making. Investors have suffered as discounts have widened. Yet, when investing, the long sweep of time can throw up key turning points that are often sparked by catalysts that are least expected. There are reasons to believe the worst may now be behind us – sunnier uplands beckon. As such, patient investors should reap the rewards of what will be a meaningful, if nuanced, period of outperformance courtesy in large part to discounts narrowing as markets continue to climb the wall of worry.
Crisis and opportunity
It has been hard pounding. An overly burdensome regulatory framework regarding cost disclosure, a consolidation of the wealth management industry looking to invest in larger, more marketable companies at the cost of their smaller brethren, difficult economic and geopolitical events, heightened discount volatility shaking the confidence of some sector investors, combined with higher interest and discount rates bringing into question the validity of certain valuations, are just some of the reasons the going has been tough.