HRI -12.90% discount

[ISAnoob]

Morning all,

I am looking at Herald Investment Trust but it currently seems to have a 14.50% average discount and a 12.90% current discount. Most of the other ITs I hold seem to be anywhere between 1-3% premium both current and average.

Does anyone know why HRI has this discount?

Thanks,

Matt

[SalvorHardin]

I know nothing about Herald beyond what I've just seen on the front page of its investor relations website. One thing leaps out at me (my bold):

"The Herald Investment Trust (HIT) seeks to achieve capital appreciation through investments in smaller quoted companies..."

Iinvestment trusts which specialise in smaller companies generally trade at larger discount than investment trusts which hold larger companies. For example, Henderson Smaller Companies (which I own) currently trade at a 14.8% discount.

The market prices a larger discount to allow for the uncertainty in valuation. A big shareholding in a smaller company is much less liquid than in a large company. The trust may have to settle for a lower price if it wants to sell most of, or all, of a particular holding so the market allows for this by pricing in a larger discount.

These concerns increase during market turmoil and other times of uncertainty, hence the widening of discounts this year. The same effect happens to a greater extent with investment trusts with large unquoted holdings (whose value is much less certain).

https://heralduk.com/funds/herald-investment-trust/

[MaraMan]

I can't amswer your question but wanted to point out that it has been a part of John Barron's IT portfolio for some time, in the themes section of his growth portfolio.

It invests in smaller companies in the tech and comms section, so difficult to understand the discount other than maybe concerns about the general economic climate.

MM

[jonesa1]

Being 48% invested in the UK, which is generally out of favour, probably doesn't help the discount.

[UncleEbenezer]

There's never been a dividend. So it's pure capital growth, with uncertainty over the discount on which you'll ever be able to cash in.

I've had a small holding for some years, and it does appear to have been, on balance, a healthy growth curve.