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Hawksmoor sees discount opportunities

Hawksmoor Investment Management has taken advantage of widening discounts that have opened up in the investment trust market amid recent volatility.

The firm says market volatility is throwing up opportunities to invest in closed-ended funds at an attractive entry point. It has topped up its holding in Impax environmental markets and brought the golden prospect precious metals investment trust back in to the Vanbrugh fund of funds after a 10-month absence.

The reintroduction of golden prospect marks the trust’s third appearance in the Vanbrugh fund. Hawksmoor says gold has been a theme since it launched Vanbrugh in February 2009 and thinks the case for holding the asset class it is still valid.

Hawksmoor points out that the gold price has recently risen while equities have fallen. This disconnection could provide a good opportunity for investors in precious metal equity funds that have been lagging gold price movements, such as golden prospect, where equity prices start to play catch-up.

Vanbrugh last sold out of golden prospect in September 2010, when the trust was trading at a discount of around 7 per cent. When Hawksmoor bought it back, this had widened to 19 per cent while its net asset value had risen.
Hawksmoor’s top-up of Impax environmental markets, an investment trust focusing on alternative energy, water treatment and waste technology, was a similar opportunity in that its share price was weak relative to a rising net asset value. The multi-manager was able to top up its holding in the trust at a 17 per cent discount, which was funded by selling its holding in BlackRock new energy.
Chief investment officer Richard Scott says: “One of the bigger shareholders in Impax wanted to reduce their portfolio and that led to the stock trading at a discount.
“We did not want to increase the risk in Vanbrugh, which is a cautious managed fund, so we sold BlackRock new energy.”

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