Westhouse Securities has tipped the £116.1m Advance Frontier Markets trust to outperform the £235.1m BlackRock Frontiers trust after a significant dislocation in price opened up.
The Advance trust is trading on a discount to its net asset value of 10.4 per cent, while the BlackRock trust is on a premium to the net value of its assets of 6 per cent.
Analysts pointed out that disparity of 16 percentage points was hard to support when the net asset value performance of the Advance fund has beaten that of the BlackRock fund in the past year.
Westhouse said: “The gap in pricing also suggests either higher stock-specific or market risk or a significantly weaker performance profile than is actually the case.”
Westhouse has given the Advance trust, managed by Slim Feriani, a ‘buy’ rating and slapped a ‘sell’ rating on the BlackRock trust, managed by Sam Vecht.
While there is a fair difference between the geographical weightings of the two trusts, the main difference is that the BlackRock trust pays a yield of 4 per cent while the Advance trust pays out nothing.
In the current environment of low interest rates and low bond yields, any investment trust with a good yield has been snapped up, pushing many of them to premiums.
