How to make money from selling investment trusts

Patient investors may find managed wind-downs and portfolio sales to be an alluring opportunity

Corporate action and record consolidation occurred in the investment trust industry last year. 2025 will be a noteworthy year as well, if the previous seven months are any indication. Deutsche Numis reports that 20 trusts were going through managed wind-downs at the start of the year, and that six more have either proposed or had wind-downs approved since January.

When a strategy, asset class, or individual trust loses favor, wind-downs typically occur. Nevertheless, if they provide a timeline and a catalyst for obtaining value from a portfolio that is consistently trading at a significant discount to net asset value (NAV), they may also offer a fresh opportunity.

This is particularly true for the market's alternative-asset segment. However, illiquid assets are typically owned by alternatives trusts, meaning that value realization may be gradual. In the event that no buyer is found for the entire portfolio, the trust will have to sell assets one at a time. For instance, NB Distressed Debt (LSE: NBDG) started winding down in 2018 and is still going strong, though the board believes that asset sales are nearing their conclusion based on its most recent report. For those with a short time horizon, this type of investing is definitely not a trade.

Closing of investment trusts.

A managed wind-down was implemented for Abrdn European Logistics Income (LSE: ASLI) last year after the entire portfolio's sales process failed. In the year's first quarter, it sold three assets and gave investors their money back, for a total of £16.5 million, or 53.3 percent of its net asset value. 16 of its 27 assets have now been liquidated as a result of additional sales, and additional capital returns are scheduled for August and September. Analysts at Deutsche Numis estimate that the NAV is currently 57point 9p, which places the shares at a 17 percent discount.

After failing a September continuation vote, JPMorgan Global Core Real Assets (LSE: JARA) is currently giving investors their money back. In February, the first cash from sales33 million, or 17% of NAVwas paid out. By the end of 2026, the trust anticipates redeeming 80% of its assets, and more sales are planned. The shares appear to be trading at an 11 percent discount based on the end-of-June NAV of 89.1p.

Investors are scheduled to vote on Riverstone Energy's (LSE: RSE) proposed managed wind-down on August 22nd, following a strategic review. According to the management's plan, two-thirds of the capital will be distributed by March 31, 2026, and the remaining illiquid assets will be sold by the end of 2027. According to the most recent NAV of 1,136p, the trust's reported discount has recently shrunk to 22%.

Despite the fact that the manager receives a termination fee of 75% of the realisation proceeds, investors should be aware that the discount is still in the double digits.

Watch out for investment trusts.

The formerly successful early-stage biotech company investor Syncona (LSE: SYNC) declared in June that it would be closing its portfolio.

The trust has stated that it will open a private vehicle for investors who wish to roll over their investment and continue to support important companies in its portfolio. This casts doubt on the liquidation schedule, but patient investors may find a lot of value there with a 40% discount.

The Life Science Reit (LSE: LABS), which declared a strategic review in March, recently reported that buyers have shown a great deal of interest in purchasing certain portfolio items. Additionally, management is still investigating a controlled wind-down. The portfolio consists of properties in Kings Cross, London, and Oxford Technology Park and Cambourne Park Science and Tech Campus, two regions of the nation with significant growth in the technology sector. Since listing, the Reit has had difficulties (leasing has been slower than anticipated, and occupancy is currently at 85%), and it has halted its dividend. However, it is worthwhile to pay close attention at a 32% discount to NAV.