Investment Trust

influence

I am always curious about how one values an investment trust and when it becomes a bargain.

Do you compare the discount against the NAV?
Do you look at the P/E ratio knowing that there is not much earning other than the growth in share price within its portfolio?
Is there any other ratios and figures that we look into?

How do one investor judge the risk of a particular investment trust other than the 'label' given by the fund house or some 3rd party financial firm?

Thanks

cheerfulcat

Hi, influence,

I look at the discount and the yield ( there's really not much else to go by, really - an investment company is not generally valued in the same manner as a trading company ). If an IT is trading at a greater than usual discount I will have a closer look at it. I also find a good yield attractive.

Having said that, normally I would choose an IT because of where it invests, or because I like the fund manager.

As to judging risk, with ITs the gearing would be the first thing to consider.

There is an Investment Trusts and Unit Trusts board on the Motley Fool which is well worth a look. Forrado and Courant are two particularly interesting posters.

HTH

Cheerfulcat