Trusts that got even cheaper in the recent sell-off

Discounts widened for many investment trusts in the post-Liberation Day sell-off.

By Emma Wallis

News editor, Trustnet

Even before ‘Liberation Day’, swathes of investment trusts were trading at wide discounts. Donald Trump’s imposition of crushing tariffs on America’s trading partners at the start of this month sent stock markets into freefall and the share prices of many trusts fell due to indiscriminate selling, causing discounts to widen further.

As William Heathcoat Amory, managing partner at Kepler Partners, said: “Share prices have been buffeted by market volatility and investment flows. It’s not obvious how the likes of Greencoat UK Wind are affected by tariffs or a recession, yet the share price has taken a hit.”

Discounts for alternative investment companies by sub-sector

Equity trusts: Discount movements by subsector, 3-7 April

On 9 April, Trump reduced tariffs to 10% for all countries except China, with a 90-day reprieve from higher ‘reciprocal’ charges. Even so, markets are likely to remain volatile for some time yet.

Amidst the stock market carnage, investment trusts may appeal to investors for several reasons: wide discounts provide an attractive entry point; and many trusts invest in alternative assets such as infrastructure and property that are not closely correlated to global trade, so should be relatively insulated from the impact of tariffs.

The silver lining to the current crisis – according to Charlotte Cuthbertson, co-manager of the MIGO Opportunities Trust – is that US equities are “no longer the only game in town”. “People might sit on their hands for a bit and feel very nervous but they will also be looking for a different source of return,” she said.

Below, analysts highlight trusts for investors who want to diversify their portfolios and snap up a bargain.

Private equity

Even before this month’s turmoil, several private equity trusts were trading on discounts of 30-40%. By 7 April, ICG Enterprise and Pantheon International’s discounts widened to 47% and HarbourVest Global Private Equity reached 45%.

Ewan Lovett-Turner, head of investment companies research at Deutsche Numis, said: “Listed private equity investment companies have been amongst the sharpest fallers in share price terms, given the potential for slower dealmaking and investor concerns around leveraged businesses. Some of the falls have reversed, but the sector remains very cheap and volatility has thrown up numerous discount opportunities.

“We believe [this] offers an excellent entry point. Boards have been more active with buybacks and we would expect this to continue given where share prices are currently trading.”

Discounts widening for alternative investment companies, 3-7 April 2025

Cuthbertson warned investors to look at private equity trusts’ underlying portfolios. Those with exposure to consumer spending could have a tough time, she said.

On the other hand, Seraphim Space looks promising because it will benefit from European governments’ pledges to increase defence spending and it is not exposed to the consumer, she noted.

The MIGO Opportunities Trust has just increased its exposure to Chrysalis Investments following its sale of InfoSum to WPP, which has generated cash for the trust’s buyback programme – a catalyst that is not impacted by trade wars.

Chrysalis has not been unaffected by the tariff crisis, however. It holds Klarna, which has postponed its initial public offering due to market volatility, Cuthbertson noted.

Real assets

As investors look for steady income streams to anchor their portfolios through turbulent times, infrastructure and renewable energy trusts could see renewed interest.

Dividend yields are at all-time highs following last week’s sell-off, according to Stifel research analysts Iain Scouller and William Crighton. “The yield on the infrastructure funds sector has moved close to 7%, which is near the previous peak in October 2023. The renewables funds sector yield is at an all-time high of 10% and this compares with an 8% yield a year ago. Of the 11 renewables funds we cover, the dividend yield is now in excess of 10% on five of them,” they said.

Infrastructure and renewables dividend yields vs UK 10-year gilt yield

Sources: Stifel, Datastream to 9 Apr 2025

Furthermore, if central banks cut interest rates, lower yields from cash and bonds could prompt income investors to look elsewhere and the discount rates used in portfolio valuations should stabilise, Scouller and Crighton said. However, weaker power prices could be a headwind for the renewables sector.

Heathcoat Amory thinks Greencoat UK Wind could do well in the current environment. “Higher inflation in the UK will be a positive for the trust. But at the same time, it appears central banks may be poised to cut interest rates to minimise the risk of recession, which may mean a lower discount rate applied to valuations. At the very least, [rate cuts would] make the trust more attractive on a relative basis, given it currently offers a dividend yield of 9.9%.”

Cuthbertson thinks trusts investing in solar power should not be too badly impacted by trade wars. “The sun will still shine and you’ll still have power created from a solar panel and it’s not that America suddenly doesn’t need any power,” she pointed out.

In a similar vein, one of the MIGO Opportunity Trust’s largest holdings is PRS REIT, which focuses on residential rental properties. Regardless of trade wars, people will still need to rent homes, she said.

Lovett-Turner also highlighted specialist debt trusts such as TwentyFour Income (9.4% yield) and TwentyFour Select Monthly Income (8.4% yield), as options for investors in search of consistent cashflows.

Exit opportunities

Several investment companies have exit opportunities coming up and these may appeal to tactical investors. “We believe that volatile markets can often present an opportune time to invest with the comfort that some or all of the holding can be redeemed close to NAV [net asset value], although clearly there will still be market risk,” Lovett-Turner explained.

Mobius and Strategic Equity Capital have full exits approaching in November at NAV and are currently trading on discounts of 11% and 13%, respectively.

Another trust worth watching is Polar Capital Global Healthcare, which is on an 8% discount and is at the end of its fixed life. The trust is working to bring forward proposals for a corporate reorganisation in 2025, with the potential for a cash exit offered as part of the reconstruction, he said.

Caveat emptor

Cuthbertson said many investment trusts looked cheap before the tariff crisis and have become even cheaper in recent days but that does not mean their share prices cannot fall even further. “They could halve again,” she said. “In wild markets when investors are nervous, share prices fly around everywhere.”

Investors need to look under the hood at investment companies’ underlying assets and ascertain whether they have confidence in the valuations of those assets. “Are the discounts real and how stale is the NAV?” she asked.

Unlike equity trusts, the NAVs of alternative investment companies are not marked to market daily, so have not moved in recent days and thus do not reflect current market conditions. Investors, if they are lucky, receive valuation updates monthly, but valuations are more likely to be revised quarterly and, in some cases, every six months.

She expects valuations to be revised downwards eventually and believes the discount rate is likely to increase due to bond market movements and also because the world has become riskier. Some valuers will add 50 basis points or 1% onto the discount rate to factor in that additional risk, she explained.

“It’ll take time to work out where discounts are going to settle. It’s a really bumpy ride,” she concluded.

A market rally could be coming for UK stocks: here’s what I’m buying

Story by Dr. James Fox

A market rally could be coming for UK stocks: here’s what I’m buying© Provided by The Motley Fool

While I’m extremely cautious, there’s some evidence the correction appears increasingly overdone. While UK exports to the US represent 2.2% of our GDP, our post-Brexit regulatory flexibility positions the UK uniquely compared to EU counterparts. What’s more, analysis from Aston University suggests that UK exports to the US could surge by 17.5% through trade diversion effects if the EU and US fail to hammer out a deal.

What’s more, the US exceptionalism narrative is weakening as inflation concerns mount. With US tariffs potentially adding 2.2 percentage points to American inflation, capital will likely seek alternative havens. Meanwhile, the 30% GDP gap between Europe and the US may begin to narrow once again. I’d also suggest that Trump’s constantly changing tariffs have worsened investor sentiment. I’m finding it hard to add to my US holdings

Here’s what I’m buying

Despite the possibility of a rally, I moved to a largely cash position early in the Trump presidency. However, I’ve been slow to initiate positions in UK stocks. I think it’s best to be extremely cautious. The one that I that I have bought is JET2.

I think Jet2 should be getting more attention for its strong financial position. It currently boasts a net cash reserve of £2.3bn and a market cap of £2.7bn, making its enterprise value just £400m. That’s equivalent to just one year of forecasted net income. But it’s not just me. Institutional analysts highlight its undervaluation, with an average price target 66% higher than current levels.

The company plans to invest £5.7bn by 2031 to modernise its fleet, transitioning to a predominantly Airbus configuration, which could enhance operational efficiency and reduce costs in the long term.

My bullishness simply comes down the valuation. Jet2 essentially has a net cash adjusted price-to-earnings ratio of one. That’s so many times cheaper than its peers.

Thursday 17 April

Baillie Gifford Shin Nippon PLC ex-dividend date
Foresight VCT PLC ex-dividend date
JPMorgan American Investment Trust PLC ex-dividend date
JPMorgan China Growth & Income PLC ex-dividend date
Merchants Trust PLC ex-dividend date
Montanaro UK Smaller Cos Investment Trust PLC ex-dividend date
Nippon Active Value Fund PLC ex-dividend date
North American Income Trust PLC ex-dividend date
Octopus Apollo VCT PLC ex-dividend date
TwentyFour Income Fund Ltd ex-dividend date
US Solar Fund PLC ex-dividend date

I’ve took £250 ‘profit’ with MRCH

‘Profit’

A ‘profit’ is not a profit until the whole position is sold or the seed capital has been withdrawn or the amount of earned dividends equals the amount invested.

MRCH is a long term buy and hold so any ‘profits’ will be withdrawn and re-invested in a higher yielding Trust, or could be re-invested in MRCH if the price falls and the yield rises.

£5,000 invested in the S&P 500 at the start of 2025 is now worth…

After a stellar finish to 2024, the S&P 500 seemed as if it was primed to continue surging in 2025. Yet following the announcement of worldwide tariffs, the US stock market has subsequently proceeded to plummet, with its flagship index down more than 15% since the start of the year and over 12% since the start of April. At least that was the case until last week when tariffs were delayed, and US stocks shot back up.

Year to date, the S&P 500 was still down almost 9% as of 11 April. However, ignoring the recent rebound, any investor who put £5,000 to work at the start of the year with an index fund would only have £4,250. And the situation was even worse for those who concentrated on the Magnificent 7. On an equal-weighted basis, shares of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia (NASDAQ:NVDA), and Tesla crashed. They were down over 25%, taking a £5,000 initial investment all the way down to £3,750.

There’s no denying it was a painful start to the year, especially for newer investors. Yes, last week’s upward surge helped take some of the pain away. But plenty of S&P 500 stocks are still trading lower today compared to the start of the year.

Investing during volatility

When investing in a volatile environment, ensuring we have some dry powder is often a prudent move. Apart from providing some helpful savings during economic turmoil, this cash offers the flexibility. It can allow investors to start buying shares when prices are in freefall. After all, some of the biggest gains we can make are during a stock market crash.

Another handy tactic is keeping a list of top-notch stocks to buy once the share price looks more attractive. That way, investors don’t need to spend countless hours investigating opportunities when disaster strikes. By being prepared, there’s a lower risk of missing out on potentially lucrative investments.

US stocks to consider in 2025?

It’s impossible to know for certain when the latest round of volatility will reach its bottom. As such, deploying a dollar cost-averaging buying strategy is likely prudent. And one Mag 7 business that I’ve got my eye on in this market is Nvidia.

The GPU chip designer is proving to be the dominant business in the AI infrastructure landscape, with some phenomenal growth under its belt. And despite US economic concerns, spending on AI-accelerator chips is set to reach $315bn in 2025.  

Semiconductors have been excluded from the announced US tariffs. While the same isn’t true for other raw materials that go into Nvidia products (like steel and aluminium), customers might still just pay the higher cost to get their hands on Nvidia hardware.

After its 30% tumble this year, Nvidia shares now trade at a forward price-to-earnings ratio of 21. That’s significantly cheaper than its historical average of 52. With that in mind, assuming that AI adoption doesn’t hit a wall, steadily drip-feeding capital into the S&P 500 stock might be an investment worth considering throughout 2025.

The post £5,000 invested in the S&P 500 at the start of 2025 is now worth… appeared first on The Motley Fool UK.

The Stock Market Can’t Make Up Its Mind. These 3 High-Yield Dividend Stocks Should Reward You Whichever Way It Goes.

 By Matt DiLallo, Neha Chamaria, and Reuben Gregg Brewer

Key Points

• Enterprise Products Partners is built to pay investors well no matter what comes its way.
• NextEra Energy generates very stable and growing cash flow to support its high-yielding payout.
• Brookfield Infrastructure can steadily grow its dividends, even amid uncertainty.

NYSE: EPD

Enterprise Products Partners

The stock market has gyrated wildly in recent weeks. The S&P 500 briefly entered bear market territory (a 20% decline from the recent peak) after a brutal stretch to start the month following President Donald Trump’s decision to levy heavy cal tariffs on imports. However, his decision to pause for 90 days sent stocks soaring in one of their best days since World War II.

This whipsaw action by the market makes it hard to know how to invest since many economists believe that tariffs of the magnitude the administration has announced could cause a major recession. While an economic downturn could significantly impact many companies, Fool.com contributors for the durability of their business models. Because of that, they should have no trouble continuing to pay and grow their high-yielding dividends, others have more recession-resistant businesses.

Enterprise Products Partners (EPD 1.17%), NextEra Energy (NEE -1.51%), and Brookfield Infrastructure (BIPC 1.93%) (BIP 2.80%) stand out to a few

Enterprise Products Partners’ 6.9% yield is rock solid

Reuben Gregg Brewer (Enterprise Products Partners): With a string of 26 consecutive annual distribution increases, Enterprise Products Partners has a proven track record of rewarding investors well. Now, add in the midstream master limited partnership’s (MLP’s) lofty 6.9% distribution yield, and you can see why you might want to buy it. That said, there’s a lot more to like about Enterprise, given the market’s current upheaval.

Enterprise Products Partners

Key Data Points

Gross Margin

12.17%

Dividend Yield

7.09%

For starters, energy is a necessity of modern life. While energy prices can be volatile, the energy infrastructure that Enterprise owns tends to produce reliable cash flows because of the toll-taker nature of the midstream sector. So long as the demand for energy remains robust, which is highly likely, Enterprise will continue to have ample distributable cash flow to pay its distribution. On that score, the pipeline owner’s distributable cash flow covered its distribution by 1.7x in 2024. That leaves a lot of room for adversity before a cut would be in order.

Meanwhile, Enterprise’s balance sheet is investment-grade-rated, and the company has $7.6 billion worth of capital investment projects in the works. So, in a worst-case scenario, it could lean on its balance sheet to support its distribution if it had to. And in a best-case scenario, it has an opportunity to keep growing its distribution in the years ahead as new investments start to add to cash flow. All in, no matter what happens on Wall Street, Enterprise looks like it is prepared to keep paying investors very well to stick around.

Stable cash flow and steady growth

Matt DiLallo (NextEra Energy): NextEra Energy operates one of the country’s largest electric utilities (Florida Power & Light), which generates very stable cash flow backed by government-regulated rates and steady electricity demand. The company also has a large portfolio of energy infrastructure assets (NextEra Energy Resources) that produce stable cash flow backed by long-term, fixed-rate contracts. This business model produces tremendously durable cash flow that’s highly resistant to economic downturns.

Key Data Points

Gross Margin

37.11%

Dividend Yield

3.21%

For proof, we can look at NextEra Energy’s dividend. The utility has increased its payment every year for the past three decades, which included several recessions.

NextEra Energy fully expects to continue growing its high-yielding dividend (nearly 3.5%). Its target is to increase its payment by around 10% annually through at least 2026. Thanks to its below-average dividend payout ratio and the visible growth ahead, it can deliver that robust growth rate.

The utility expects to grow its adjusted earnings per share by a 6% to 8% annual rate through 2027 from last year’s baseline. Powering that growth is its heavy investment in building new renewable energy-generating capacity at FPL and within its energy resources segment.

Meanwhile, it has lots more growth ahead. Demand for electricity in the U.S. is accelerating, powered by the onshoring of manufacturing, electric vehicles, and artificial intelligence (AI) data centres. Forecasters project that power demand will grow a staggering 55% by 2040. That should provide NextEra Energy with plenty of opportunities to invest in expanding its power platforms.

The steady growth should continue

Neha Chamaria (Brookfield Infrastructure): Brookfield Infrastructure has increased its dividend every year for 16 consecutive years now. Importantly, those dividends were always backed by growing cash flows, which is one of the biggest reasons why I believe this is among the few stocks that could reward you no matter where the stock markets go.

Brookfield Infrastructure

 BIPC

Key Data Points

Gross Margin

62.41%

Dividend Yield

4.75%

Brookfield Infrastructure grew its dividend by a compound annual growth rate (CAGR) of 9% between 2009 and 2024 and funds from operations (FFO) per unit at a CAGR of 15% during the period. That means the company has generated enough cash flows year after year to invest in growth and pay bigger dividends. There’s a reason behind Brookfield Infrastructure’s solid FFO and dividend streak.

Brookfield Infrastructure owns and operates a large base of assets that are mostly regulated, such as utilities, rail and toll roads, midstream energy, and data centres. So, almost 85% of its FFO is regulated or contracted and indexed to inflation. That means Brookfield Infrastructure can generate steady cash flows regardless of how the economy fares, making this stock an intriguing bet during uncertain times.

Brookfield Infrastructure also consistently recycles capital, selling assets as they mature and using the proceeds to buy new assets. For example, in March, it sold a 25% stake in a U.S. gas pipeline. This month, it struck a deal to acquire midstream energy assets from Colonial Enterprises.

The steady flow of cash flows from its assets and proceeds from the sale of mature assets has helped Brookfield Infrastructure not only grow its business but also consistently reward shareholders. With shares of the corporation yielding 4.9%, units of the company’s partnership yielding 6.2%, and the company targeting 5% to 9% annual dividend growth, Brookfield Infrastructure is a dividend stock to double up on in today’s volatile times.

Here’s What to Do

Brett Owens, Chief Investment Strategist
Updated: April 9, 2025

“Americans prepping for retirement aren’t watching the markets,” Treasury Secretary Scott Bessent said on Sunday.

Scotty, please. At least try to pretend you have some connection with reality.

Sure, we income investors have it better than most hopeful and current retirees. We do not rely on stock prices for income, per se. Our dividend portfolios provide us with cash flow that we use to pay our bills.

Imagine living by the “4% withdrawal rule” right now, selling 4% of our stocks every year, hoping we don’t run out of money—while the S&P 500 is dropping 4% every day as Wall Street battens down the hatches for a global recession or worse?

Last time we checked in on 4% rule creator MIT grad and all-around-smart guy William Bengen in 2022, he was sweating out his retirement. Poor Billy B. was then cutting back on restaurants. Post-Liberation Day, our man may be eating ramen noodles and frozen spinach!

Our dividend portfolios, while better insulated from the tariff volatility than MAG 7 stocks, are not impervious to declines either. Much to Bessent’s surprise, we do watch the markets because our mission is to retire on dividends and keep our principal intact. And while it’s impossible to avoid a losing day, week, month or even year, over multi-year periods our nest egg grinds higher while our dividends keep churning.

We usually stay fully invested. But we exercise more caution during bear markets because, in steep selloffs, there is nowhere to run.

(And yes, I realize the S&P 500 has not yet officially hit bear market status, defined as a 20% drop from peak to trough using closing prices. That said, this is now a bear market.)

Mere corrections don’t have liquidations like we saw last Friday and into Monday’s session. Waterfall selloffs. Our dividend positions, which had enjoyed “flight to safety” money inflows all year, were whacked alongside everything else in the financial markets for a couple of days.

In the short term, this shows that investor capitulation is near. When our safe stuff gets hit, it is typically the end of a downside move. At least for now.

But in the long term, the price tantrum we have seen since the Liberation Day tariff announcement is no joke. The bear is back and things may stay nasty for the rest of 2025.

In bear markets, return of capital is crucial. Back in 2022, we successfully navigated similar turbulent waters together, reminding ourselves: “Cash is king,” “sell into rallies,” and “protect your principal above all else.” These principles are just as valid today.

To be honest, I didn’t think we would need them so soon! I’m old enough to remember when we saw one bear market per decade. This is already the third for the “roaring twenties”—we had a quick bear in 2020 that was extinguished early by money printing, an “orderly” drop in stocks and bonds throughout 2022, and now a third bear in April 2025.

Stanley Druckenmiller—arguably the investing GOAT—weighed in on X over the weekend in literally his fifth tweet ever. HE warned: “I do not support tariffs exceeding 10%—this path risks recession.”

This bear is still young, and it’s impossible to know how severe it will be. Don’t tell Bessent, but we will—wait for it—watch the market for clues.

Big picture, until the bear exits, caution will be crucial. Let’s review our bear market mantra:

1. Stay calm and vigilant: Resist panic selling – cash out on bear market rallies.
2. Prepare for short-term rallies: Use these to strategically unload stocks most vulnerable to recession and tariff disruptions.
3. Prioritize protection: Capital preservation is our primary objective.

Remember the lessons of 2022: Bear markets aren’t for heroes—they’re for prudent investors who live to invest another day. Cash positions, defensive holdings, and selective buys during extreme sentiment lows are our best tools.

And about that sentiment—it rarely gets worse than this. CNN’s Fear and Greed Index hit 4 out of 100:

I’ve never seen it this low. (If you have a lower screenshot, please send along!)

Forward returns for the S&P 500 from these washed-out FGI levels are excellent. See below. Over nearly every time window, profits followed:

Forward Returns When FGI Reads Extreme Fear

It is nearly impossible to see now, but we will get a catalyst that will spark a market pop. The trick will be figuring out what to do with it. In 2020, we bought a “reaction rally” with the intent to sell but we never had to. In 2022, we were fortunate enough to unload positions ahead of time and then again on the first bear bounce higher.

I wish I had the 2025 script in front of me. I don’t and, of course, nobody does. I will warn you now that we will sell positions, and it won’t feel good because there will be a temptation to “wait” for a position to recover. As contrarians it is painful to sell when the FGI is 4. We feel compelled to “hold on” to everything for a turn.

In bear markets, however, we sell without hesitation to protect our capital. We can buy the position back later—often at a lower price. It is how we protect our principal and, in doing so, our future income streams. Because if we don’t look out for ourselves, who will?

£££££££££££££

Contraian Investor published before Trump retreated.

The first projection for the Snowball at the six month stage is £4,749.00, do not double to arrive at the year end figure.

The fcast is £9,120.00

The comparison share is VWRP £118,573.00, when using the 4% rule would give you a ‘pension’ of £4,742.92 pa.

If you approximate using the above figures, for ten years at a compound growth of 7% the amounts would be

The Snowball £18,240.00 a yield of 18% on seed capital.

VRWP £9,484.00

The figure for VWRP could be higher or even lower, depending on markets.

Are you an investor or a gambler ?

Looking for dividend stocks? Here’s a discounted investment trust to consider !

Story by Royston Wild

The Motley Fool

Here is one of my favourites, and especially at the moment as economic uncertainty grows.

Trust the process

Real estate investment trusts (REITs) are designed in a way that can make them ideal candidates for passive income. In exchange for tax reductions, these investment vehicles must pay at least 90% of yearly rental profits out in dividends.

This doesn’t guarantee that shareholders will enjoy a large and/or growing second income, as cash rewards are still tied to earnings. But it does mean the business has less flexibility to decide to limit, reduce, or eliminate dividends than other shares.

As a provider of residential property — and more specifically for adults with care and support needs — rental income and occupancy rates tend to be more stable than those of trusts operating in more cyclical sectors.

In addition, the rents it receives are effectively funded by local authorities, who pay housing benefit to approved providers who lease its properties. Changes to government funding could impact this favourable funding model. But I’m optimistic that this is unlikely given the huge savings that trusts like this provide the taxpayer.

According to Social Housing REIT,

Residents living in specialised Supported Housing cost the government about £200 less per week than being in a residential care home and nearly £2,000 less per week than remaining in in-patient care.

As a consequence, the trust estimates that its own portfolio saves the government around £71.6m each year.

8.9% dividend yield

I don’t think these qualities are reflected in the cheapness of Social Housing REIT’s shares.

At 61.9p per share, the trust also trades at an 45.8% discount to its estimated NAV per share of 114.1p.

The investment trust also offers excellent value from a passive income perspective. Its forward dividend yield of 8.9% is one of the highest across the REIT asset class. To put that into context, the FTSE 100 average sits way back at 3.9%.

Social Housing REIT’s share price has been negatively impacted by higher interest rates in more recent years. This has depressed the value of its assets and driven up borrowing costs.

While it remains sensitive to future rate movements, I believe that — on balance — this investment trust is an attractive dividend payer to consider today.

The post Looking for dividend stocks? Here’s a discounted investment trust to consider! appeared first on The Motley Fool UK.

Assura leaves the watchlist after agreeing to a takeover bid.