Some investors buy LICs at a discount in the hope of extra gain when the discount is removed, but it might never happen. There’s a way of judging the discount relative to its historic norms.
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It’s important to consider why a LIC is trading at a discount, as what might appear good value worth buying may be built into the price for many years, and the discount may even worsen.
Plenty of LICs trade at a discount to their NTA value, often for good reasons, but there are opportunities to benefit from a narrowing of the discount if an investor knows what to look for.
The surge in popularity of listed investment companies has seen the erosion of the average price discount relative to net assets. Whether a LIC is likely to trade at a discount or a premium should inform your decision to invest.