Shares in several investment trusts concentrating on UK small caps and mid-cap are trading on relatively wide discounts to their net asset values, broker Stifel has noted.
Demonstrating the point, the broker pointed out that the more international FTSE 100 has risen 1% since the start of the year, helped by its large oil companies, while the UK domestically-focused FTSE 250 index has fallen just over 10%.
The AIM 100 and AIM 50 indices have also fallen more than 13% and 16% respectively.
Trusts on relatively wide discounts include Mercantile Investment Trust PLC, on a 13% discount, the widest end of a six-month range of a 13% to a 6% discount.
Abrdn UK Smaller Cos (formerly called Standard Life UK Smaller Cos) also offers some value on a 13% discount, the analysts said, with the discount at the widest end of its six-month range of 13% to 2%. The Abrdn UK Smaller portfolio has a focus on growth stocks, with this resulting in a sharp NAV fall over the past six months of 15% compared with a decline of 7.7% in the FTSE Small Cap index and a 12.5% decline in the UK small cap sector weighted average over the period.
Polar Capital Technology Trust PLC (LSE:PCT) has also widened out to a 13% discount, which the analysts said "looks reasonable value" compared with the six-month range of a 15% discount to a 0% discount.
Worldwide Healthcare Trust PLC (AIM:WWH) has reached a 9% discount, compared with its range between a 10% discount and 4% premium over the past six months.
Elsewhere, the analysts noted that investors have been drawn into the previously unfashionable areas of UK & Global Income sectors as high inflation and hawkish central bankers push UK gilt yields higher.
In the Global Income sector, the analysts said Murray International Trust plc (LSE:MYI) "stands out for delivering strong returns in this difficult market", with its NAV total return up 7% and it is now trading at a 3% discount versus a six month range of 7% to 2%.
In the same sector is JPM Global Growth & Income PLC, which has delivered an NAV TR of 2% since the start of the year, with the shares now trading at a 4% premium, towards the top of its premium discount range of 1% discount to 5% premium.
The UK Equity Income sector has also performed "relatively well", with this reflecting in some premium ratings.
The City of London Investment Trust PLC, for example, is on a 4% estimated premium, while Lowland Investment Trust Plc (LSE:LWI) is on a 3% discount, Murray Income Trust plc (LSE:MUT) at a 4% discount and Edinburgh Investment Trsut PLC on a 6% discount.
"All these trusts are trading towards the top end of their 6-month ranges. The income approach is attractive in a rising rate environment and also with its focus on dividends, tends to have a more defensive style tilt in a backdrop of volatile markets."