Page 28 - DIY Investor Magazine | Issue 31

The second strongest discount narrowing was by NB Private Equity Partners, another not to have reported a NAV. Its share price appreciation of 9% was well ahead of the 4.3% growth in the S&P500 (it is US-focussed), yet it trades on a discount wider than 20%. Aberdeen Smaller Companies Income saw significant discount narrowing, to 12.6% from 16.3%. While the NAV performed very strongly, share price gains exceeded it. ‘ITS PORTFOLIO IS FULL OF DIGITAL DISRUPTORS IN THE EDUCATION, CONSUMER AND TECHNOLOGY SECTORS’ This reversed at the start of September, as the leading candidate to replace Suga promises more fiscal stimulus and low-interest rates for longer. Growth strategies benefitted the most in this bounce, but CCJI is still well-positioned to benefit from the improving corporate governance culture in Japan, which includes a growing dividend culture. CONCLUSIONS The summer period was a lull after healthy recovery for markets since the nadir of the pandemic; as a result, discounts look full overall, with investors having to look hard for opportunities in specific trusts. We see no reason to make any changes to our portfolio. No new trusts have hit our target levels (see table below), while there have been no outstanding opportunities emerge. We do think both Jupiter Green and Brown Advisory US Smaller Companies look attractively cheap compared to similar peers, but neither discounts are quite wide enough for this portfolio. Both ASCI and stable mate Standard Life UK Smaller Companies were amongst the best performing UK smaller companies trusts over the past three months as growth recovered against value. Aside from these three, discount moves have been fairly muted, averaging 2.3% with a median of essentially no move (0.1%); this is in line with the general picture on the market. The other private equity trust on our list, Oakley Capital Investments, saw its discount widen by 1.7%; on a discount of 21%, one of the widest in our portfolio, the shares look particularly good value to us; its portfolio is full of digital disruptors in the education, consumer and technology sectors. CC Japan Income & Growth saw its discount widen 2.9%; Japanese equities have generally been out of favour in the past few months, as the country struggles to shake off the pandemic and resignation of the PM. TRUST Aberdeen Smaller Companies Income Aberdeen Standard Asia Focus Downing Strategic Micro-Cap Henderson Opportunities Menhaden NB Private Equity Oakley Capital Investments Riverstone Energy Schroder Japan Growth Scottish Oriental Smaller Cos AVERAGE SECTOR AIC UK Smaller Companies AIC Asia Pacific Smaller Companies AIC UK Smaller Companies AIC UK All Companies AIC Environmental AIC Private Equity AIC Private Equity AIC Commodities & Natural Resources AIC Japan AIC Asia Pacific Smaller Companies DISCOUNT TARGET (CUM FAIR) 08/09/2021 -12.6 Level with SLS' discount (currently -7.6%) -13.1 <5% -12.2 Level with UK Smaller Companies sector average (currently -8.6%) -16.1 Par (expect this in cyclical rally) -27.5 Level with Global sector average (currently -2.8%) -20.4 <10% -21 Level with private equity sector average (currently -11%) -32.7 Par (or wind up) -12.3 Par -13.7 <5% -18.2 -14.9 DISCOUNTED OPPORTUNITY PORTFOLIO AND TARGET DISCOUNTS MEDIAN Source: Morningstar Past performance is not a reliable indicator of future results DIY Investor Magazine · Nov 2021 28