Worst performing trusts

QuotedData

Share price moves

On the negative side, Digital 9 Infrastructure led the pack. It was impacted by issues surrounding its debt, having been too aggressive with its leverage and exposure to cash-hungry companies in prior years. Its debt burden had become so high that the board was required to cut to its dividend, widening its discount in the process. It was also impacted by the delay to the sale of its prize asset Verne Global. The terms of this sale then disappointed investors. Digital 9 now trades on a roughly 70% discount, having traded on a premium in 2022. Its board has announced a strategic review.

Second on the list is ICG-Longbow Senior Secured UK Property Debt, which is in wind-up mode, and this distorts its returns.

In a world of 6% cash deposits, the returns from forestry assets seem pale in comparison. This has certainly been true for Foresight Sustainable Forestry, which returned -6.3% in NAV terms. Rather than there being any trust specific announcement, it seems that the return profile of the trust is no longer attractive in the current market environment, especially when one considers that it pays no dividend.

HydrogenOne is invested in cash consumptive growth stocks and like other funds with similar exposures has suffered since interest rates began to climb. The portfolio is still quite new and will take time to mature. Nevertheless, encouraging progress is being made within many portfolio companies.

Hydrogen is a beneficiary of the Inflation Reduction Act, which also supports the development of renewable energy generation in the US. However, sentiment towards US Solar (USF) and Ecofin US Renewables (RNEW) have been hit hard by higher interest rates. USF underwent a management change during the year and tried and failed to sell its portfolio. RNEW was forced to suspend its dividend following a tornado strike on the grid link to its wind farm investment.

Ground Rents Income Fund will wind-up in light of a more challenging market environment, specifically the likely reforms from the Leasehold and Freehold Bill introduced by the government. Its independent valuer took the opinion that there was material uncertainty around the value of the trust’s assets because of the bill.

Globalworth Real Estate Investments invests in central and eastern European properties and continues to trade. Though given the economic weakness of Europe and large portfolio of corporate properties, investors may have become concerned around the return potential of these assets.

We have covered the reasons behind the decline in demand for Chinese equities, and JPMorgan China Growth & Income, previously.

Despite an active 2023 for Syncona, its discount has still widened, reflecting the general lacklustre returns of the biotech and healthcare sector over the year, increasing costs of capital, and stock specific issues. Syncona was forced to write off a £54.5m earn out from the sale of its Gyroscope experimental eye treatment after the buyer Novartis elected to stop its development.