Last August, just 10 investment trusts paid more than 4pc a year. This figure has now risen to 16, according to research by Oriel Securities, a stockbroker.
The returns on offer compare favourably with the average “unit trust” – a fund that is simply a reflection of the shares it buys – which yields 3.5pc, the same as the FTSE 100 as a whole.
Investment trusts have become popular with income-seeking savers thanks to a record of increasing dividend payments year after year. Such has been the rush to invest that many trusts’ share prices have risen more quickly than the value of the underlying assets.
As a result, some have lost their “bargain” factor. This gap between trusts’ share prices and the underlying assets has fallen to a 40-year low. While the typical trust still trades at a 4pc “discount” – meaning its shares are worth 4pc less than its assets, suggesting a bargain – many trusts now trade on large premiums.
The analysis by Oriel Securities indicates that there are still plenty of opportunities for income seekers
Here is The Telegraph article
Investment trusts (IT) (closed-end funds) can be competitive and often low-cost instruments for many of us, particularly when they trade at discounts to net asset value (NAV). Subscribers can look most of them up in the Chart Library and also vet them online. This will enable you to see their top-10 holdings, in case you would rather cherry pick from the selection rather than invest in the IT. That might be advisable where ITs are trading at premiums to NAV
Here is the top yielder: Henderson Far East Income, which appears to be firming following its fall from the high a year ago.Back to top