It was a final quarter to forget for global stockmarkets, particularly US equities, but one positive is that share price falls have led to cheaper valuations.
Investment Trust Bargain Hunter
On Black Friday (23 November) billions of pounds will be spent by UK householders taking advantage of the cut-price deals being offered by retailers.
But as far as investors are concerned, the opportunity to bag a bargain is a year-round event, particularly for those who are investment trust fans.
The past decade’s bull market has made it hard to find investment trusts sitting on double-digit discounts. Almost every asset has performed well, and investors have piled in accordingly.
That’s proved equally true of the UK equity income sector, says Simon Moore, senior investment manager at Seven Investment Management (7IM). With investors’ hunger for yield and the sector housing some of the oldest, largest and best-known investment trusts in the industry, there has been no lack of interest.
Income-seeking investors can secure a yield of more than 6 per cent at a discount if they pick the right investment trust.
Henderson European Focus Trust (HEFT) has seen its discount slip to almost 10 per cent after a period of poor performance.
The trust, which remains our Money Observer Conservative portfolio tip and is also a 2018 Money Observer Rated Fund, has underperformed its peers of late. At the same time, poor sentiment toward the region has pushed the £298 million trust firmly out of favour with investors.
For the last couple of years, the general consensus among professional investors has been that there are two areas of the world that value investors should be targeting: Europe and Japan.
Cheaper valuations compared to other markets have whetted the appetite, while the economic picture has also been seen to be favourable.
This trust was one of 2017’s big winners, but there should be more to come – and as a bonus it is still trading on a discount.
This trust has doubled investors’ money over the past five years, yet is offering a double-digit discount.