When a discount isn’t just a bargain

By Chris Salih on 16 March 2026 in Investment Trusts

Everyone loves a bargain. Whether it’s spotting a new pair of shoes in the sale that you’ve been eyeing for months or feeling slightly smug about finding the exact same item online for half the price, there’s a certain satisfaction in picking up a bargain.

Investing can offer similar opportunities. In the world of investment trusts, that bargain often comes in the form of a discount – when the share price of a trust is lower than the value of the assets it owns.

At first glance, that can look like an easy win. After all, who wouldn’t want to buy £1 worth of assets for less than £1? But as any seasoned investor will tell you, a discount is really just the starting point. Understanding why it exists, how it behaves over time and whether it truly represents value is what matters most.

How discounts happen

Unlike open-ended funds, investment trusts have a fixed number of shares that trade on the stock market. Because of this structure, their share prices are influenced not only by the value of the assets they hold (known as the net asset value, or NAV) but also by supply and demand for the shares themselves.

If a trust is particularly popular with investors, its share price may rise above the value of its underlying assets. This is known as trading at a premium. On the other hand, if sentiment towards a trust or the sector it invests in is weak, the share price may fall below the NAV, meaning it trades at a discount.

In simple terms, the popularity of the trust can influence how expensive or cheap its shares appear relative to the value of the assets inside the portfolio.

Not every discount is a bargain

While discounts can look attractive, it’s important to remember that they often exist for a reason. Sometimes investors may be worried about the investment strategy, the performance of the manager, or the outlook for the sector the trust invests in. In other cases, the underlying market may simply be out of favour.

It’s worth looking at a trust’s historic discount or premium range when researching an investment trust. If a trust normally trades close to its NAV but suddenly finds itself on a wide discount, that could indicate an opportunity. But if a trust has historically traded at a discount, the current level may simply be part of its normal pattern.

The long-term opportunity

Where discounts can become particularly interesting is for investors with a long-term mindset. If the underlying portfolio performs well and sentiment towards the trust improves, investors can benefit in two ways. The value of the assets may rise, while at the same time the discount could narrow as more investors become interested in the trust. This combination can deliver a “double boost” to returns, as both the portfolio value and the share price move higher. However, this is rarely a short-term trade. Those looking to hold a trust for the long term are far more likely to capture the full benefit of the gap between the share price and NAV eventually closing.

Why discounts are easier to judge in equity trusts

Discounts are often easiest to understand when looking at investment trusts that invest in listed equities. If a trust holds companies such as Microsoft or Nvidia, the value of those holdings can be calculated using live market prices. This makes the trust’s NAV relatively transparent and allows investors to clearly see whether the shares are trading above or below the value of the underlying assets.

It becomes more complicated in areas such as property or infrastructure, where asset valuations are often updated periodically rather than determined by daily market trading. In these sectors, discounts may sometimes reflect uncertainty around asset valuations rather than simply investor sentiment.

Staying calm during uncertain times

Of course, wider market conditions can also influence discounts. Geopolitical tensions and economic uncertainty can cause investors to become more cautious, which can widen discounts across the sector.

Annabel Brodie-Smith, communications director of the AIC, says it’s important for investors to remain focused on the long term:

Ten trusts currently trading on a discount

With sentiment towards some parts of the market remaining subdued, a number of investment trusts are currently trading on notable discounts to their NAV.

For long-term investors willing to look beyond short-term sentiment, these discounts could present interesting opportunities, provided the underlying assets and strategy remain compelling.

Below, we highlight ten Elite Rated investment trusts currently trading on discounts that investors may want to consider exploring further.

*Source: AIC, as at 11 March 2026