Hardman Talks | Widening discounts in investment companies

06 Dec 2023 / News Video
discounts in investment companies

In this episode of Hardman Talks, Keith Hiscock and Riccardo Bindi are joined by Annabel Brodie-Smith, Communications Director of the Association of Investment Companies, to talk about discounts to net asset value in the sector.

In November, the AIC announced that the discount in the investment company sector was the widest since 2008, when the world was in the depths of a severe financial crisis. The discount has been widening steadily since 2022, owing to a combination of rising inflation, rising interest rates, and a general rise in geopolitical risk following the invasion of the Ukraine.

The discount or premium of the share price to the value of the underlying assets (NAV) is a distinguishing feature of investment companies compared to open-ended funds, often known as unit trusts. Annabel explains how a discount or premium comes about, and what it means. Widening discounts to NAVs in times of increased risk-aversion are nothing new, of course, but we thought this was something worth discussing as this has historically been a good time for long-term investors to pick up some bargains. Returns after the 2008 crisis, when discounts were last at these levels, are ample testament to why these might be interesting times for investors to be looking at investment companies.

The industry body for investment companies, the AIC has a remit to improve understanding of ICs for all investors.

Watch the video now to find out more.

Watch the interview

Annabel Brodie-Smith leads the AIC’s communication strategy, sharing the uses and benefits of investment companies with the media, opinion formers, advisers and private investors. She oversees the AIC’s PR and marketing activity, as well as managing the AIC’s adviser training and information programme and liaising with online platforms.