With markets rising over the past year on the back of quantitative easing, many industry commentators have pointed out that the majority of assets and equity sectors are looking either expensive or at full value.
However, according to Tuite Dalton, bargains are still available in the emerging markets sectors, and some more specialist areas too.
Emerging markets
The recent under-performance of emerging markets against their developed counterparts has pushed the discounts out on some well-established trusts.
Templeton Emerging Markets is currently sitting on a discount to NAV of 10 per cent – its highest over the past six months, according to Oriel.
The average figure over this time has been 9 per cent, although it has been as tight as 7 per cent.
The £2.1bn trust, managed by Dr Mark Mobius, has a strong bias towards Asia, with 25 per cent in Hong Kong and China, 14.3 per cent in Thailand and 10.3 per cent in Indonesia.
In share price terms it has significantly outperformed its benchmark over three, five and 10 years.
While the MSCI Emerging Markets index has made just 16.49 per cent over the past three years, the trust has made 23.42 per cent, according to data from FE Analytics.
Performance of trust vs benchmark over 3yrs
Source: FE Analytics
It currently has no gearing and has ongoing charges of 1.31 per cent.
The £744m Genesis Emerging Markets trust looks even cheaper compared with its recent history, sitting on a discount of 7 per cent compared with a six-month average of 3 per cent.
The current figure is as low as it has been in this time.
It has actually outperformed Mobius’s over the past three years, making 30.66 per cent in share price terms.
Almost 50 per cent of the trust is in Asia, while 21 per cent is in the Middle East and Africa – half of it in South Africa, but 2.3 per cent each in Zambia and Nigeria.
It also holds UK oil explorer Tullow Oil, which has projects in the developing world.
It has no gearing, and the ongoing charges are 1.69 per cent.
Frontier markets
One way of responding to the lacklustre performance of emerging markets is to look to frontier markets.
Sam Vecht’s £100m BlackRock Frontiers trust has seen strong investor interest in recent months.
It is on a premium of 2 per cent, compared with a six-month average of a 2 per cent discount.
The discount on the trust has been as low as 8 per cent over the period.
"BlackRock Frontiers has had a storming start to the year and has been trading in premium territory the last couple of months, recently announcing a possible C-share issue," Tuite Dalton said.
"It has the dual attraction of a potentially high and growing dividend stream alongside providing real portfolio diversification."
"An alternative is Advance Frontier Markets, currently trading on an 11 per cent discount, but with a lesser dividend yield."
Advance Frontier Markets is an £86.2m trust run by Slim Feriani.
Data from FE Analytics shows that the share price has returned marginally less than the BlackRock trust since the latter was launched in December 2010.
Both trusts have performed more or less in line with the MSCI Frontier Markets index over this period.
Performance of trusts vs index since Dec 2010
Source: FE Analytics
Both trusts have a performance fee, and including those deductions the BlackRock fund is more expensive, charging 2.14 per cent to the other trust’s 1.54 per cent.
Neither currently use gearing.
Mining
The poor performance of mining stocks and gold has taken its toll on funds that invest in this part of the market, but BlackRock World Mining is nevertheless looking expensive compared with its recent history, Tuite Dalton notes.
Its current discount of 10 per cent is close to its six-month low of 8 per cent, while it has been as wide as 16 per cent.
Tuite Dalton says the relative expensiveness of Evy Hambro’s £916m trust is thanks to scarcity value, the new dividend policy and recovery expectations.
The analyst says Golden Prospect Precious Metals is looking cheap on a 17 per cent discount compared with a six-month average of just 8 per cent.
The £34.1m trust is run by New City Investment Managers, and holds 64 per cent of its assets in gold-related investments, 30 per cent in silver and 6 per cent in platinum.
It is highly concentrated, with the top-five holdings accounting for 40.8 per cent of AUM.
It is 9.2 per cent geared, and charges an annual management fee of 1.5 per cent.
Healthcare
Healthcare stocks have been on a tear for a couple of years, but Tuite Dalton notes that one trust in the sector offers extremely good value.
He says that the £483m Worldwide Healthcare Trust, run by Samuel D Isaly at Orbimed, looks cheap compared with Daniel Mahoney and Gareth Powell’s £157m Polar Capital Global Healthcare Growth & Income trust, which is relatively new to the sector.
"Worldwide Healthcare is finally beginning to win the recognition which it deserves, and whilst its discount has narrowed to 6 per cent, it still looks good value relative to the higher-yielding Polar Capital Global Healthcare."
"[The Polar Capital trust] trades on a 4 per cent premium to NAV which is technically expensive," he said.
The Polar Capital Global Healthcare Growth & Income trust’s premium has been as high as 7 per cent over the past six months, and as low as a discount of 4 per cent.
At 4 per cent it is still significantly higher than its 1 per cent six-month average.
It has underperformed the Worldwide Healthcare Trust since it was launched in June 2010, according to data from FE Analytics.
The Worldwide Healthcare Trust has made 71.92 per cent over this time while the Polar Capital fund has made just 57.69 per cent.
The MSCI AC World Healthcare index has grown 59.98 per cent over this time.
Performance of trusts vs index since June 2010
Source: FE Analytics
Worldwide Healthcare has beaten the index over five and 10 years as well, having made 199.89 per cent over the longer time-frame.
It is more expensive, however, with ongoing charges of 1.34 per cent compared with the 1.13 per cent of the Polar Capital fund.
The latter has no gearing while the Worldwide Healthcare Trust has 9 per cent.