Our data shows both sectors trading at deep discounts; 35.7 per cent for the average investment trust in IT Private Equity and 11.03 per cent for the average trust in IT Europe.
"European equities are trading at a discount for a reason, but it is an opportunity for investors to get access to some good managers at attractive prices," said Stephen Peters, investment trust analyst at Charles Stanley.
"Private equity and Europe are where the value is in the closed-ended world. Private equity investment trusts are in much better shape than they were at the start of the credit crunch, and many are buying back shares, too. The private equity sector is massively out of favour, so it is worth picking up some shares if you can."
Performance of trusts with widest discounts
| Investment trusts |
Discount (%) |
1-yr returns (%) |
3-yr returns (%) |
5-yr returns (%) |
| Pantheon International |
-45.6 |
1.27 |
142.8 |
-21.5 |
| F&C Private Equity |
-39.8 |
11.41 |
90.4 |
-8.6 |
| Princess Private Equity |
-34.7 |
-3.0 |
124.7 |
N/A |
| Standard Life Euro Private Equity |
-40.72 |
-5.2 |
107.8 |
-34.4 |
| Henderson Euro Trust |
-13.48 |
-8.8 |
14.2 |
5 |
Source: FE Trustnet
Peters points to Princess Private Equity and Standard Life Euro Private Equity as two investment trusts worth a look.
"Princess Private Equity is paying a dividend, Standard Life Euro Private Equity is at a 40.72 per cent discount, and the portfolio is ripe for realisations. It has got a good track record but is quite illiquid," he said.
He also points to F&C Private Equity, saying it is more liquid, but cautions that it is a small investment trust with £207.9m under management. Our data shows the F&C vehicle trading at a discount of 39.8 per cent.
Ewan Lovett-Turner, investment companies analyst at Numis, says private equity fund of funds Pantheon International is a good bet for a long-term investor who doesn’t mind a bit of volatility in their portfolio. It is at a 45.4 per cent discount.
"Private equity has been undervalued. Pantheon has a good long-term track record and a diversified approach and we think it is interesting. The sector as a whole is offering good discounts when the rest of the investment trust sector isn’t," he explained.
He added: "Private equity funds of funds are at attractive levels for the long-term investor, but it’s a volatile sector."
The £947.5m Pantheon Ventures investment trust has two share classes.
Investors should note that the bull market case for private equity trusts is determined by a pick-up in global mergers and acquisitions.
Looking at European trusts, Peters pointed to Henderson Euro Trust.
"The likes of [Henderson Euro Trust manager] Tim Stevenson are available at attractive discounts. European Investment Trust looks good too."
"Those are the managers who will be off to the races if there’s a macro improvement."