To check an investment trust’s discount or premium, compare its share price with its net asset value (NAV) per share for the same share class, currency and relevant dates. Use this calculation:
Discount or premium (%) = (share price − NAV per share) ÷ NAV per share × 100
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A negative result is a discount because the shares trade below the value of the underlying assets. A positive result is a premium because the shares trade above NAV. For example, a 90p share price against a 100p NAV is a 10% discount; 110p against 100p is a 10% premium.
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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchWhat an investment trust discount or premium measures
An investment trust is a listed company whose shares trade on a stock exchange while the company owns a portfolio of investments. Its net asset value is the value of those investments and other assets minus liabilities. NAV per share divides that net value by the number of shares in issue.
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The exchange price is set by buyers and sellers. Because that price is determined by supply and demand, it commonly differs from NAV per share. The difference is expressed as a percentage of NAV:
(share price − NAV per share) ÷ NAV per share × 100
- A result below zero is a discount.
- A result above zero is a premium.
- A result close to zero means the shares are trading near NAV.
The denominator is NAV per share, not total assets and not the share price. Using the wrong denominator produces a different, incorrect percentage.
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How to check a trust step by step
1. Identify exactly what you are checking
Record the trust’s full name, share class and trading currency. Some trusts issue more than one class of share, and a class with a different currency, dividend entitlement or conversion right may have a different price and NAV. Do not combine a sterling price with a dollar NAV, or figures for one class with figures for another.
2. Find the share price
Use a reliable market quotation for the exchange-listed shares. The Association of Investment Companies (AIC) company profile, the trust’s own website, a current factsheet or a market announcement may show the price. Note whether the number is a last traded price, closing price, bid price, offer price or mid-market price. A company’s published discount may use a specified mid-market price rather than the price you see at the moment you check.
3. Find NAV per share
Look for the NAV per share from the same trust profile, factsheet or announcement. Check whether it is an official reported NAV, an estimate or the latest available value. A NAV is not necessarily calculated at the same time as the exchange price.
4. Write down the dates and status
Put the price date and NAV date beside each number. The AIC says its daily Morningstar feed is uploaded at 8:15am on each business day and reflects the previous day’s market close. For equity trusts, that data is an estimate as of the previous market close. For alternative investment trusts, the displayed value may be the most recently reported NAV, adjusted for income, dividends or corporate actions. A seemingly precise percentage can therefore compare observations made at different times.
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5. Check the NAV basis
Before calculating, establish whether NAV is cum-income or ex-income. Cum-income NAV includes income accrued up to the valuation date; ex-income NAV removes the relevant income or distribution. Also check how borrowings are valued: at fair value or at par. These choices can change the reported discount even when the portfolio and share price have not materially changed.
6. Calculate and show your inputs
Insert the share price and NAV per share into the formula. Keep the unrounded result during the calculation and round only the final percentage. If either input is an estimate or the dates do not match, label the result as approximate.
Worked calculations
Discount example
Suppose the share price is 90p and NAV per share is 100p:
(90p − 100p) ÷ 100p × 100 = −10%
The signed result is −10%, conventionally reported as a 10% discount.
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Premium example
Suppose the share price is 110p and NAV per share is 100p:
(110p − 100p) ÷ 100p × 100 = 10%
The trust is trading at a 10% premium.
Using pounds instead of pence
The units cancel as long as both figures use the same currency. A £4.50 price and £5.00 NAV produce:
(£4.50 − £5.00) ÷ £5.00 × 100 = −10%
When the result is only an estimate
If the price is from today but the latest NAV is a reported figure from an earlier date, the arithmetic is still valid for those observations. It is not a real-time measure of the underlying portfolio. State the two dates and describe the result as an approximate discount or premium.
Where the figures come from and why timing matters
The AIC’s company profiles and data feeds are convenient starting points, but they are not a promise that every displayed number is a live, independently revalued NAV. The AIC distinguishes between estimated values for equity trusts and latest reported values for some alternative trusts. Corporate actions, dividends and income adjustments can also affect a displayed figure.
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A trust’s own announcement may publish a discount calculated with a particular share-price convention, NAV date and borrowing valuation. If you are reporting the company’s figure, use its stated methodology rather than silently substituting your own inputs. If you calculate an independent figure, identify the source, date, price type and NAV basis.
Why two published discounts can differ
Different percentages do not automatically mean that one source made an arithmetic mistake. The inputs or conventions may differ.
| Possible difference | Effect on the comparison |
|---|---|
| Price date or price type | A closing, bid, offer or mid-market price can produce different results, especially in a volatile or illiquid share. |
| NAV date | A reported NAV may lag the market price by one day or longer. |
| Cum-income versus ex-income | Including or excluding accrued income changes NAV per share. |
| Debt at fair value versus par | Revaluing borrowings changes net assets and therefore the denominator. |
| Share class or currency | Different classes can have different prices, NAVs and entitlements. |
| Estimated versus reported NAV | An estimate may move with a market close, while an alternative-asset NAV may remain the latest formal valuation. |
The AIC’s January 2026 release illustrates the importance of labeling a series. Its long-run historical series uses unweighted averages, excludes venture capital trusts, and calculates discounts with ex-income NAV and debt at par. The AIC’s current displayed discount data uses market-capitalisation-weighted averages and cum-income NAV with debt at fair value. Those series should not be combined or compared as if they used one definition.
How to interpret the number
A discount is not automatically a bargain
A discount says only that the market price is below the selected NAV per share at the selected time and on the selected basis. It does not forecast that the discount will narrow, that NAV is accurate, or that the portfolio is suitable for you. A trust can remain at a discount for years, and a low-quality or hard-to-value portfolio can appear cheap for reasons that are not quickly resolved.
A premium is not automatically overvalued
A premium can reflect strong demand, confidence in the manager, access to assets that are difficult to buy directly, or expectations about future performance. It can also disappear quickly if sentiment changes. The percentage must be considered alongside the trust’s structure and assets.
Supply and demand drive the gap
Market supply and demand can move the share price independently of a day’s change in underlying asset value. A large sell order, weak demand, a share buyback, or a change in investor sentiment may widen or narrow the gap. The discount or premium is therefore a market observation, not a second NAV calculation.
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What to examine before comparing trusts
Calculate each trust on a comparable basis first. Then assess the factors that help explain whether the difference is meaningful for your decision.
- Discount history: compare the current figure with that trust’s own historical range, using the same NAV convention where possible.
- Underlying assets: listed equities, private companies, property, infrastructure, credit and specialist assets have different valuation frequency and liquidity.
- Gearing: borrowing can magnify gains and losses and can affect the relationship between portfolio movements and NAV.
- Charges: ongoing management and operating costs reduce returns over time.
- Holdings and sector exposure: concentration, country exposure and the largest positions may matter more than a small difference in discount.
- Liquidity: a thinly traded share may show a stale or wide market price.
- Share-price versus NAV performance: shareholder return includes movements in the discount or premium; NAV return measures the underlying portfolio performance and excludes that market re-rating.
- Suitability: objectives, time horizon, risk tolerance and the ability to accept gearing and price volatility remain relevant.
How to compare two or more trusts fairly
- Collect the share price, NAV per share, currency, share class and dates for every trust.
- Confirm whether each NAV is cum-income or ex-income and whether debt is at fair value or par.
- Use the same formula and round each final result in the same way.
- Do not rank the trusts until you know that the figures are comparable. A 12% discount on one basis is not necessarily cheaper than a 9% discount on another.
- Compare each current figure with its own discount history and investigate the asset, gearing, charge and liquidity differences.
- Separate portfolio performance from market-rating performance by looking at both NAV return and shareholder share-price return.
A cross-sector league table of discounts is rarely a complete investment assessment because the assets, valuation frequency and risks may be fundamentally different.
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Using total assets instead of NAV per share
The formula requires NAV per share. Total assets must first be reduced by liabilities and divided by shares in issue.
Mixing currencies
Convert the figures into one currency or use a source that already reports both in the same currency. Currency conversion can itself introduce a timing difference, so record the exchange-rate date if you convert manually.
Mixing share classes
Check the class identifier and distribution rights. A price for an income share cannot be compared with NAV for an accumulation or currency-hedged class.
Treating a stale NAV as live
Read the valuation date and frequency. This is especially important for alternative assets whose NAV may be reported less often than listed-market prices.
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Find the definitions in the factsheet or announcement. If a source does not state the basis, do not present its percentage as directly comparable with a figure whose basis is known.
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Rounding inputs too early
Use the published precision in the calculation and round only the final percentage. Rounding both inputs can create a noticeable difference when the discount is small.
Calling the discount a guaranteed catalyst
There is no automatic timetable for a discount to close. Treat any narrowing as an outcome that may or may not occur, not as a promised return.
Historical context: useful, but not a live market signal
The AIC’s January 2026 historical release covers 53 years of investment trust discount history, with monthly data from 29 December 1972. It reported that the current double-digit discount period began in May 2022 and had lasted three years and seven months through December 2025. Those figures describe the stated historical series and its December 2025 cutoff; they are not a current discount reading and should not be used to infer market conditions in October 2026.
When using any long-term chart, check whether it is weighted or unweighted, which trust types are included, and whether its NAV is cum-income or ex-income and its debt is valued at fair value or par. A change in methodology can look like a market move even when it is partly a measurement change.
A recording template for your calculation
Keeping a short audit trail makes the result reproducible:
| Field | What to record |
|---|---|
| Trust and class | Full legal name, share class and ticker if relevant |
| Currency | Currency used for both price and NAV |
| Share price | Value, price type and observation date |
| NAV per share | Value, valuation date and whether estimated or reported |
| NAV basis | Cum-income or ex-income |
| Debt basis | Fair value or par |
| Calculation | Show the signed result before rounding |
| Source notes | Source name and any methodology stated by the trust or data provider |
This record lets you explain why your result differs from a company factsheet or an aggregated market statistic without assuming that either calculation is wrong.
Quick Recap
Quick checklist
- Have you used share price against NAV per share?
- Are the share class and currency identical?
- Do you have both the price date and NAV date?
- Is the NAV estimated or formally reported?
- Is it cum-income or ex-income?
- Is debt valued at fair value or par?
- Did you use NAV per share as the denominator?
- Did you round only the final percentage?
- Are you treating the result as an observation, not proof of value?
- For comparisons, are all trusts measured on the same basis?
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