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Questor: seven trusts that have been unduly punished – buy on the market’s bad days

One problem with writing share tips at present, when the market is routinely moving by 5pc or even 10pc in a day, is that our advice can quickly become out of date.

So for most of today’s recommendations – all of them investment trusts that we think have fallen too far – we will qualify our advice by saying they are ones to buy “on the market’s bad days”, of which we fear we have not seen the last.

We have looked down our list of tips for any trusts that seem to have been punished excessively in the coronavirus sell-off. Two themes stand out.

Property trusts have felt the effects of the suspension of many of their “open-ended” counterparts. Across the market as a whole, many investors want to reduce exposure to property – and, because shares in trusts can still be sold, they are suffering from a disproportionate amount of selling and their prices have been pushed down.

Of course we don’t yet know the effects of the virus crisis on the viability of the tenants that ultimately provide property trusts’ income, or the extent of any “rental holidays” or similar concessions that may have to be granted to tenants. But some trusts look better placed in this respect than others.

Secure Income Reit’s tenants include private hospitals, the Travelodge hotels business and Merlin Entertainments, the theme park owner. The latter two are obviously under pressure at present but we suspect that the market is pricing in too much damage to future rents, as the shares are about 38pc below their pre-coronavirus levels.

But they have been as much as 59pc below and readers may want to watch for any return to such lows for a chance to buy.