Deep Dive: Higher cost of debt raises stakes for investment trusts employing gearing

'Part and parcel' of the sector

Valeria Martinez
clock • 5 min read

The stakes for investment trusts employing gearing have significantly escalated now that borrowing costs are on the rise, but experts remain positive over its long-term structural benefits.

Rising interest rates, volatile markets, cost disclosure concerns and geopolitical conflicts in Ukraine and the Middle East have contributed to discounts across the UK investment trust sector not seen since the depths of the Global Financial Crisis.  Shareholder activism and M&A surge is a mixed blessing for investment trust sector The average discount across all investment trust sectors stood at 16.9% at the end of October, the widest discount for a month-end since December 2008, when it reached 17.7%, according to data from Morningstar. Performance has lagged against this ba...

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