The Discount Trap: Why Cheaper Isn’t Always Better for Income Investors
Imagine finding a £1 coin selling for 90p. You’d buy it without hesitation — the value is fixed, the discount is pure profit. Now imagine that same coin is actually a claim on a basket of assets whose true worth nobody can verify precisely, sold by someone who’s been trying and failing to offload it at that price for years. Suddenly the “bargain” looks different. This is roughly the situation facing anyone tempted by a discounted investment trust: the arithmetic is genuinely favourable, but the arithmetic is not the whole story.