Investment trusts offer cheap purchases for investors

JPMorgan Asset Management says investment trusts are offering cheap investment opportunities for investors.

As a result of market volatility discounts for investment trusts have widened and are providing investors with very attractive buying opportunities. Such wide discounts are not necessarily an indication of reduced underlying value but are more closely related to market sentiment.

Discounts on some JPMorgan Asset Management investment trusts are around 10 to 15 percent despite the fact the underlying value of the investment trust is much higher. For example, JPMorgan American Investment Trust is currently trading at a discount of around 9%* and a share price of 633p, whilst the net asset value is 697p. Similarly JPMorgan Smaller Companies Investment Trust is trading at nearly 15% discount, with a share price of 401p and a net asset value of nearly 472p.

James Saunders Watson, Head of Sales and Marketing for Investment Trusts at JPMorgan Asset Management said, "The prospect of buying a share at a reduced rate is very appealing. For instance, purchasing £1 of assets for 85p is something that should be attractive to most investors."

"Obviously there is a risk implied in that a discount could widen further, but the underlying value of the share is likely to remain unchanged. Investment trusts are designed to be long term investments, so the case in favour of buying at a discount now means over the medium to long term returns are expected to be heightened."