3 top FTSE investment trusts to consider before Halloween
Many FTSE investment trusts continue to trade at a discount. This means the share price is lower than the net value of the assets they hold (known as discount to NAV per share).
Essentially then, an investor can buy £1 worth of investments for, say, 90p. If that gap later closes, this can boost returns. Of course, it can also widen, so thereâs risk as well as opportunity. In other words, no free lunch!
Here are three investment trusts trading at a discount that I think are worth a closer look today.
Asia growth
First up, we have Pacific Horizon Investment Trust (LSE:PHI) from the FTSE 250. This one aims to achieve capital growth through Asian stocks (excluding Japan).
Top holdings include Taiwan Semiconductor (TSMC), Samsung Electronics, Tencent, ByteDance, and Sea Limited. These companies provide exposure to plenty of era-defining trends, including semiconductors, artificial intelligence (AI), e-commerce, cloud computing, fintech, and the energy transition through miners Zijin Mining and MMG.
Long-term performance has been excellent. The trust has returned 368% over the past 10 years, versus just 163% for its benchmark (the MSCI All Country Asia ex Japan Index).
I mention the long term because I think thatâs the best time horizon with this trust. But in the near term, there could be some turbulence from tariffs, negatively impacting the performance of some holdings.
Over the next two decades though, the Asia Pacific region is expected to drive most global growth, supported by favourable demographics and the unstoppable rise of its global middle class.
Right now, investors can pick up shares of Pacific Horizon for 760p, which represents a 9.5% discount to NAV.
Asia income
Sticking with this theme, we have Schroeder Oriental Income Fund (LSE:SOI). Despite a share price rise of 20% this year, there’s still a 4.6% discount to NAV.
As the name implies, this one focuses on income rather than out-and-out growth. Therefore, the holdings are from more mature industries such as banks (Oversea-Chinese Banking Corp and DBS Group) and telecommunications (Singapore Telecommunications and Australia’s Telstra).
The same risk applies here, with President Trump’s tariffs on Asian imported goods causing massive uncertainty. But I think the same rewards apply, with the added potential bonus of a rising income stream.
Indeed, the FTSE 250 trust has grown its payout every year since launch in 2005. The dividend yield currently starts at a respectable 3.65%.
Asian companies are increasingly world-leading and returning cash to shareholders. The Schroder Oriental Income Fund aims to tap into the Asian income story.
Schroder Oriental Income Fund.
Top hedge fund
Finally, turning to the FTSE 100, I want to highlight Pershing Square Holdings (LSE:PSH). This trust gives exposure to the hedge fund strategies of billionaire Bill Ackman.
Now in this case, I think some level of discount might be justified. That’s because Pershing manages a highly concentrated portfolio of 10-12 stocks. Arguably, this is a conviction bet on Ackmanâs skill.
However, the 27.4% discount looks excessive, especially as Ackman appears to have lost none of his stock-picking skill. For example, Alphabet‘s up around 150% since Pershing started loading up in Q1 2023. Uber‘s also flying (+35% since early February when Ackman announced a position).
For investors interested in a top-performing hedge fund, I think the stock’s worth digging into.
The post 3 top FTSE investment trusts to consider before Halloween appeared first on The Motley Fool UK.
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Ben McPoland has positions in Pacific Horizon Investment Trust Plc, Pershing Square, Sea Limited, Taiwan Semiconductor Manufacturing, and Uber Technologies. The Motley Fool UK has recommended Alphabet, Sea Limited, Taiwan Semiconductor Manufacturing, and Uber Technologies. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
