“3 top rated trusts trading on a double digit discount” is the lead headline on the Morningstar email page that was emailed to me (as a retail investor) yesterday. The follow on teaser text suggests that this could be because UK funds are “oversold” and therefore cheap.
However, reading the actual content, which is confined to a rather shallow commentary on 3 Smaller Companies investment trusts, one reads that the double digit discounts are less than the 10 year averages, which themselves are drawn from a relatively benign long term “bull’ market. So no extra value there!
Playing the discount to premium game (and of course vice versa!) is an aspect of owning investment trusts, but one that adds extra risk.
Morningstar is a good business with highly qualified academics in its research units so it is a pity that it seems to be turning into a touting vehicle for the fund managers that pay to get listed with it – a sort of quid pro, I guess.
In my opinion, if a research organisation lives on the fees it gets from the people it researches, you can’t expect it to give you independent advice. In this case, you obviously can’t rely on it to apply logic either!
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