The discounts on investment trusts have been widening over the past few weeks as sentiment in the ma...
The discounts on investment trusts have been widening over the past few weeks as sentiment in the market deteriorates, representing a buying opportunity, according to Nick Greenwood, head of investment trusts at Christows.
Greenwood said trusts that suffered most are those investing in sectors the market has fallen out of love with, technology, media and continental Europe.
Greenwood, however, feels that in the coming months discounts will narrow sharply, and that this situation represents a good medium term opportunity to invest in the generalist sector.
He said: 'Although in the short-term discounts are drifting as a result of investors selling their shares through market nervousness, the long-term trend of supply and demand in the investment trust market has changed with there now being more buyers than sellers. We are guessing at anything that between two and six weeks discounts will stop widening.'
The discount on the Foreign and Colonial Investment Trust has moved out from 10% to 14% during the first week of July alone while the Herald Investment Trust, which invests in technology and media related companies was at a 10% discount as of 10 July 2001. Despite the negative sentiment on technology over the past year, Herald had been at a premium of 19% on 19 October 2000.
Greenwood said that in the case of Herald, the share price had fallen by 30% even before taking into account any movement in its NAV.
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