U.K. investment trust valuation and investor behavior, 1880-1929

Sotiropoulos, Dimitris; Rutterford, Janette and Tori, Daniele (2022). U.K. investment trust valuation and investor behavior, 1880-1929. The Journal of Economic History, 82(4) pp. 1031–1069.

DOI: https://doi.org/10.1017/S0022050722000365


This study looks at the valuation of UK investment trusts for the fifty years following their appearance as companies in the 1880s. Based on a large and unique dataset compiled from primary sources, our calculations reveal huge variation between the ordinary share prices of investment trusts and their underlying net asset ‘fundamental’ values. This mismatch is a well-known puzzle in modern financial markets and has attracted a large volume of research because it casts doubt on the concept of market efficiency. We investigate possible explanations for this pricing puzzle and shed light on UK investor behavior before the 1930s.

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