Britain’s investment trusts face turning point with policy shifts and activist pressure

LONDON, Nov 21 (Reuters) – Britain’s unloved investment trusts may be nearing a turning point as falling interest rates, a possible government drive to boost share ownership, and activist pressure converge to unlock value.
Investment trusts, which pool shareholder funds into diversified portfolios, have been a fixture of Britain’s markets for 150 years. They aim to deliver steady dividend income but often trade below the value of their underlying assets.
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Average discounts to net asset value (NAV) have been stuck in double digits for over three years – the longest stretch in at least three decades.
With investment trusts including the likes of Tritax Big Box and RIT Capital Partners making up nearly a third of the FTSE 250, the index’s sluggish 4.3% rise this year highlights the sector’s underperformance.
According to the Association of Investment Companies (AIC), the average investment trust share price trades at 13% below NAV compared to a historical average of about 4% from 2015 to 2021.
POLICY SHIFTS AND MARKET HEADWINDS
Discounts widened during the Bank of England’s interest rate-hiking cycle from 2021 to 2023, as higher-yielding, lower-risk assets lured investors away.
The discounts also reflect broader malaise in UK equities, which have suffered persistent outflows, a dearth of new listings and a surge in deals taking companies private.
UK equities have seen $32.4 billion in outflows in 2025, according to Barclays Research and EPFR data.
But falling interest rates could change the picture, investors and analysts said.
The BoE has signalled another potential rate cut in December, and possibly more next year.