Skip to main content

In order to access the website of Winterflood Securities Limited you must first read and accept the following terms:

This website is not directed at, or intended for distribution to or use by, any U.S. citizen, person, or entity that resides in or is located in the United States of America or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation which would subject Winterflood to any registration or licensing requirements with such jurisdiction. Services are not available to U.S. persons except where such services are permitted under SEC rule 15a6 or other relevant exemptions from SEC Broker/Dealer registration requirements.

Please note that Winterflood Securities Limited is not registered as a broker-dealer with the Securities and Exchange Commission and is not a member of Financial Industry Regulatory Authority Inc. (“FINRA”). All research reports provided on this website are being distributed directly by Winterflood Securities Limited to persons in the U.S. that qualify as “major U.S. institutional investors” in compliance with Rule 15a-6(a)(2) of the Securities Exchange Act of 1934. Accordingly, these research reports have not been prepared in compliance with FINRA requirements. Please refer to our Full Disclaimer here.

Research on this Website

Research on this website has been issued for the information of Professional Clients and Eligible Counterparties (as defined in the FCA handbook) of Winterflood Securities Ltd (“Winterflood”). The terminology used within the research reports is intended for professional investors. Research reports are not intended to provide the sole basis for any evaluation of an investment decision.

Each research report on this website must be read in conjunction with any disclaimer which forms part of it. Your attention is drawn to the date of issue of the information provided and of the opinions expressed therein. Any opinions are those of the Winterflood Investment Trust research team and are subject to change without notice and Winterflood is not under any obligation to update or keep current the information contained herein. The material on this website is based on information obtained from sources believed to be reliable but which have not been independently verified and are not guaranteed as being accurate.

Use of Cookies

For information on the cookies used on our websites, please refer to our Cookies Policy which can be accessed here.


For information on how we treat your personal data, please refer to our Privacy Notice which can be accessed here.

More information can be found in our Legal Disclaimer

If you have read and accepted the terms and conditions for use of this website please click continue
22 Jan 2024

Annual Investment Trust Review of 2023

Annual Reports

Will Fortune Favour the Brave?

2023 was a year of two ‘halves’ for investment trusts, with the sector in negative territory over the first ten months of the year, before rebounding strongly in November and December, coinciding with increased investor confidence that ‘peak rates’ had been reached. As a result of this ‘Santa rally’, the investment trust sector delivered a positive return of +4.9% for the year, although this still represented an underperformance of the FTSE All Share (+7.9%). This disappointing relative performance was primarily attributable to discount widening, which we think reflects negative investor sentiment towards interest rate sensitive asset classes and a lack of demand from retail investors, who preferred to invest in attractive ‘risk-free’ returns, combined with some sector-specific headwinds such as cost disclosure rules. The sector average discount widened from 11.5% to 13.2% last year, with the nadir of 19% (reached at the end of October) representing a level not seen since the Global Financial Crisis in 2009 and briefly in March 2020 at the onset of the Covid-19 pandemic. Investment trust discounts appear to be closely correlated with UK Gilt yields, particularly since the start of 2022, when inflationary concerns accelerated.

We think this correlation between the investment trust sector average discount and UK Gilt yields is likely to continue in 2024, particularly in rate-sensitive asset classes such as Infrastructure, Renewable Energy Infrastructure, Property and Private Equity. In our view, the current discounts in these areas offer an attractive entry point for 'brave' investors, with the potential for a ‘double whammy’ of improving NAV performance and a positive re-rating when interest rates start to fall, especially if this acts as a catalyst for retail investors to re-enter the investment trust market. Nevertheless, we would caution that interest rates are unlikely to return to near-zero levels any time soon, and therefore the extent of this re-rating may well be limited.