What do IT discounts actually tell investors?

INVESTMENT TRUSTs

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Jackie Beard, director of closed-end fund research at Morningstar, argues investors must understand the reasons behind IT discounts in order to choose the right portfolios.

There has been a raft of headlines recently about the average discount in the investment trust sector reaching its lowest level since the 1970s. While this is true, it is important to understand it results from the averaged discount of some 500 funds that invest in a multitude of asset classes (VCTs and 3i excluded). The funds include: private equity, listed equity, direct property, infrastructure, hedge funds, distressed debt, physical assets such as gold coins or aircraft, and broad geographic spreads, including single country funds, regional funds and global funds. There is, therefore...

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