Trusts Rebound as Activist Investors Shake Up the Market

Activist investors, including Boaz Weinstein's Saba Capital hedge fund, have sparked a rebound in the investment trust sector after years of underperformance. Investors are taking notice as the sector's discounts and yields reach record highs.

Key Takeaways:

• The average investment trust discount narrowed from 16% at the beginning of 2025 to 13% currently, with 50 trusts showing a discount of 5% or less.
• Boards are taking steps to reduce discounts, including share buybacks and mergers, with Henderson European and Fidelity European merging in May.
• Activist investors are focusing on trusts with large discounts, such as Syncona (50% discount) and Seraphim Space (15% discount).
• The infrastructure and renewable energy sector is also seeing discounts, with typical discounts of 14% and 25% respectively.
• Investors like Emma Darius McDermott and Charlotte Cuthbertson are recommending trusts like Temple Bar, Downing Renewables & Infrastructure, and Law Debenture, citing generous dividends and potential for growth.
• Some trusts, like Murray Income, are seeking a review of their discount levels, and others, like Achilles, are at extremely low discounts of just 0.19%.

Statistics:

• The average investment trust discount narrowed from 16% to 13% in 2025.
• 50 trusts show a discount of 5% or less.
• Share buybacks are being used by boards to reduce discounts, with Murray Income at a 7% discount.
• Mergers are also taking place, with Henderson European and Fidelity European merging in May.
• The typical discount on an infrastructure trust is 14%, rising to 25% for trusts that back renewable energy projects.
• Discounts are present in the bricks and mortar REITs, with Aberdeen European Logistics Income at an 18% discount.

Sources:

• Darius McDermott, Fundcali-flood bre
• Charlotte Cuthbertson, Asset Value Investors
• Emma Bird, Winterflood Securities
• Ben Yearsley, Fairview Investing