Page 14 - DIY Investor Magazine | Issue 37

Apr 2023 14 DIY Investor Magazine · At the moment, discounts appear particularly steep for investment trusts that are investing in relatively illiquid assets such as private companies and real estate, where NAV data is available less frequently. This perhaps reflects uncertainty about what may happen to the value of those assets during the current challenging economic environment, but it should be remembered that investment trusts are highly suitable vehicles for illiquid assets, because they represent a permanent source of capital. ‘CAN CREATE VERY ATTRACTIVE BUYING OPPORTUNITIES FOR THE LONG-TERM INVESTOR’ This means the managers of the trusts have time to trade in and out of less liquid assets without becoming forced sellers, which has been known to cause serious problems for open-ended funds in the recent past. Meanwhile, investors should view less liquid asset classes with a particularly long-term investment horizon, over which time the ultimate opportunity for growth should comfortably offset any near-term uncertainty. Indeed, history suggests that financial markets have a habit of discounting too much bad news in the near-term, which can create very attractive buying opportunities for the long-term investor. CONCLUSION The fact that UK investment trusts have been trading at their widest discount for fifteen years suggests there are currently bargains to be found if investors look carefully. Due diligence is, as always, vital, and investors should do their research before committing to an investment. We are confident in the investment proposition of each of Schroders investment trusts and would encourage investors to find out more in order to understand the individual attractions of the Schroders range. The long-term chart at the beginning of this article suggests that the broad level of discount currently seen on UK investment trusts won’t remain this wide forever. Happy shopping! Click here to find out more about Schroders Investment Trusts > Never miss an update – subscribe to our monthly newsletter > SCHRODER REAL ESTATE - THE OUTLOOK FOR UK PROPERTY - NICK MONTGOMERY