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Greenwood picks through rubble from the bubble

Determining the true net asset value of smaller specialist investment trusts trading at wide discounts is becoming more difficult, according to MAM Funds fund manager Nick Greenwood.

He says 220 new investment trusts launched between 2006-2008, many of which focused on alternative asset classes that were difficult to organise as open-ended funds.

Greenwood is finding good investment opportunities for his CF Miton select assets fund among some of these trusts as part of his “rubble from the bubble” investment theme. He focuses on well managed trusts with assets of less than £100m that are trading at a discount because they are unloved.

He says discounts have opened up because investor perception has led to negative market sentiment.

Greenwood says smaller specialist investment trusts are more difficult to value relative to more mainstream trusts due to their variety and the need to understand the value of underlying assets. This can work in his favour because where the market does not recognise their true value, unsustainable discounts will occur that lead to some sort of corporate activity.

He says: “In the old days, you were spoon-fed the net asset value but now you have to work out what the true value is. There is very little research on some of these trusts and it might be their low share prices are due to people not knowing they are there.”

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