Shareholder activism and M&A surge is a mixed blessing for investment trust sector

Driven by discounts at GFC levels

Valeria Martinez
clock • 5 min read

Discounts not seen since the Global Financial Crisis are driving a fresh surge in shareholder activism and M&A across the UK investment trust space. While this is likely to help lift prices in the short-term, it could also lead to a significant shrinkage of the sector.

The average discount across all investment trust sectors stood at 16.92% at the end of October, the widest discount for a month-end since December 2008, when it reached 17.73%, according to Morningstar.  Alternative trusts have been hit the hardest. At 55.52%, Growth Capital was the Association of Investment Companies sector with the steepest discount last month, followed by Property UK Residential (53.71%), Property - Europe (47.99%) and Private Equity excluding 3i (35.7%).  The discount of Renewable Energy Infrastructure, a sector that consistently traded at a premium until Septembe...

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