Interesting idea. A big discount can certainly magnify the underlying yield of a trust’s portfolio e.g. Tetragon, which I looked at a few months back, sits on a discount of 40%+ which boosts its yield to nearly 6%.
https://www.itinvestor.co.uk/2019/02/the-tale-of-tetragon-and-the-dastardly-discount/

The reverse is obviously true as well, with many alternative asset trusts yielding a little bit less than their original stated targets because they have risen to premiums since they launched.

I tend to look at yield as part of the total return, though, rather than an aim in itself. I don’t think a manager would go for higher yielding investments just because their trust traded on a premium, or the reverse.

For example, if I’m looking to achieve a 5% yield on my investment in a trust in the global sector, then to achieve that yield a trust at a 10% premium has to sweat its assets much more than a trust on a 10% discount. So the trust on the discount should either (1) have a more robust yield in the future, or (2) have more growth stocks which are lower yielding currently.

Interested in your thoughts.

Thanks Michael. I did have a paragraph on new issues in this piece originally but culled it during my edits!

I remember in the 90s that most new issues had warrants attached. It was the only way back then that punters could be persuaded to buy into new listings as they nearly always fell to a discount in pretty short order.