General Discussion

In today's Times there is an article by Patrick Hosking, Financial Editor, entitled "Investment trusts face a test of value and many are failing". It talks first about RIT Capital Partners and the discount to which it has fallen and attributes it to the increasing proportion of its portfolio invested in assets for which there is no independent market price, eg venture capital, private equity, unlisted stocks etc.

The article goes on to refer to investment trusts with illiquid assets such as property, wind farms and song catalogues. Where assets have to be valued by a discounted cash flow method the NAV is dependent on a choice of discount rate. Hosking ends by saying that NAVs need to be "kept up-to-date and reflect reality".