JohnW wrote: ‘ITs offer the opportunity of discounts. Of course, discounts widen when markets fall and narrow when markets rise. But as we're all supposed to try & buy cheap, this seems like a very good thing’
IT’s will be good investments, or not so good, but what you’re describing is akin to buying dollars when the $US has fallen against the pound, and then selling when it rises, ie speculating on currency movements since the widely held view is that such currency fluctuations even out over time without nett gain.
Just as the IT’s discount/premium shows no net appreciation over time (I’m guessing); which is why I asked for any chart history of that. The assets in the IT will pay interest or generate dividends, which sounds like investing, but the discount aspect of ‘buy low’ is speculation I think. But then you’ve seen I’m a bit rusty on IT’s.
In the majority of cases regarding IT's and their potential discounts, your 'currency-speculation' dollar analogy is wrong, and I'll try to explain why...
Broadly, Investment Trusts contain underlying investment-components that are
themselves priced by the market at any given time
as individual investments, and the collective value of all those underlying investments, as well as taking into account things like IT debt and loans, is then attributed to the NAV calculation of the IT.
If we ignore the IT debt and loans aspects for now,
and concentrate on the package of underlying, individually-priced investments, then if we relate back to a 'dollar' based analogy, an IT trading on a discount is really more aligned with one
where the underlying investments are 'boxes of dollars' that all add up to a certain value themselves,
but where the overall package of IT-held boxes is trading at a price that's out of step to the number of dollars inside them... The key thing here is that in the majority of cases in IT discount situations,
everything is still 'dollars', but
the ones inside the boxes that the IT own are being priced differently
to the ones that are available outside the IT...
The above is in some ways a simplistic explanation, because there are also other aspects that might influence the price of an overall IT, and hence the discount or premium being attributed against it's underlying NAV, such as management reputation or prospects, the amount of gearing (borrowing) being used with an IT, and sometimes elements of underlying IT holdings that are often difficult or even impossible to gather 'external valuation' comparisons against, and those aspects do then sometimes blur things a little when trying to properly assess the overall investment value of some IT holdings in relation to a potential NAV-based premium or discount, but in general terms regarding the majority of IT's
which might broadly hold collections of normally-accessible individual market-investments, then the above 'boxes of dollars' analogy is much more appropriate than trying to inject 'currency speculation' descriptions into any NAV-discount conversations...
There's a good guide here that explains the basics around Investment Trust NAV discounts and premiums, which hopefully aligns with the above 'boxes of dollars' analogy -
https://www.invesco.com/uk/en/investment-trusts/invesco-insights/investment-trusts-discounts-and-premiums-explained.htmlCheers,
Itsallaguess