The number of investment companies trading at year-high discounts to net assets almost doubled to 18 week ended Friday 22 November 2024. The two themes observed in recent weeks – rising gilt yields affecting alternative assets funds; and Trump’s victory in the US election impacting funds investing in emerging markets – still in evidence.
ByFrank Buhagiar 25 Nov
We estimate 18 investment companies saw their share prices trade at 52-week high discounts to net assets over the course of the week ended Friday 22 November 2024 – eight more than the previous week’s 10.
Two themes highlighted in recent Discount Watches still very much in evidence during Week 47 of the year.
Funds from the alternative assets space continue to feature prominently among the 52-week high discounters. Eight out of the 18 funds were alternatives. Concerns over government spending and borrowing have seen 10-year gilt yields spike up to as high as 4.5% from the 3.75% seen in September. Higher yields can lead to higher discount rates. Higher discount rates used to value alternative assets can result in lower fund valuations. Having said that, the number of alternative year-high discounters in Week 47 matched the previous week’s eight – a sign the gilt yield theme is waning or just taking a breather?
Widening discounts in the emerging/frontier markets sector reflect fears that Donald Trump’s victory in the US election is bad news for developing nations’ economies due to the prospect of a stronger dollar, higher US inflation/interest rates and higher tariffs on imports into the US. This week, three funds investing in developing , Utilico Emerging Markets (UEM), Vietnam Enterprise (VEIL) and VinaCapital Vietnam Opportunities (VOF) feature in the Disco Watch. No surprise two of these are Vietnam-focused as the country is among the largest exporters to the US and therefore potentially has much to lose.
As for the remaining seven funds on the list, these come from a random walk of sectors – healthcare, equity income (global and UK), environmental, North America and flexible.
The top five
| Fund | Discount | Sector |
|---|---|---|
| HydrogenOne Capital Growth HGEN | -76.04% | Renewables |
| Ceiba Investments CBA | -74.43% | Property |
| Gore Street Energy Storage GSF | -52.40% | Renewables |
| VPC Specialty Lending Investments VSL | -48.29% | Debt |
| Syncona (SYNC) | -44.57% | Healthcare |
The full list
| Fund | Discount | Sector |
|---|---|---|
| VPC Specialty Lending Investments VSL | -48.29% | Debt |
| Utilico Emerging Markets UEM | -21.57% | Emerging Markets |
| Impax Environmental IEM | -15.02% | Environmental |
| New Star IT NSI | -40.30% | Flexible |
| Global Opportunities Trust GOT | -26.16% | Flexible |
| Scottish American SAIN | -11.22% | Global Equity Income |
| Syncona SYNC | -44.57% | Healthcare |
| Third Point Investors TPOU | -27.11% | Hedge Funds |
| Pershing Square Holdings PSH | -36.26% | North America |
| Tritax Big Box BBOX | -27.07% | Property |
| Ceiba Investments CBA | -74.43% | Property |
| Gore Street Energy GSF | -52.40% | Renewables |
| Foresight Environmental Infrastructure FGEN | -33.09% | Renewables |
| Renewables Infrastructure Group TRIG | -25.90% | Renewables |
| HydrogenOne Capital Growth HGEN | -76.04% | Renewables |
| Murray Income MUT | -13.06% | UK Equity income |
| VinaCapital Vietnam Oppunities VOF | -25.87% | Vietnam |
| Vietnam Enterprise VEIL | -23.51% | Vietnam |
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