Strong returns from trusts that are still cheap

You normally get what you pay for when buying investment trusts. Well-managed funds with a good record generally trade at a premium to net asset value (NAV), while a large discount usually reflects a poor record and doubtful quality. However, there are exceptions. These include several trusts in the private-equity sector, where discounts of around 20% are not unusual and can represent a compelling investment.

Private equity in general is “an incredibly attractive asset class, with $6trn of assets globally that consistently outperform public markets”, says Oliver Gardey, manager of the – itself currently on an 18% discount to NAV. However, the dispersion of performance between managers is high so “accessing the best private-equity managers is critical”. Unfortunately, “top-tier managers are very popular, so you need to be part of the club (which means being well-connected) and able to make a minimum commitment of £5m for each investment,” he says. “It takes £50m-£100m for a well-diversified portfolio and a long-term commitment, as funds take