Takeover frenzy: number of investment trusts shrinks by 17% in three years

Dan Coatsworth  Tuesday, June 24

A £175 million bid for Downing Renewables & Infrastructure represents the 10th investment trust to receive a takeover offer this year – and several more have been the target of bidding wars.

With so many trusts trading well below the underlying value of their portfolio, it’s feasible to suggest takeover action will continue for the rest of the year given the bargains on offer. Sustaining a rapid pace of takeovers would exacerbate a worrying trend that’s already in motion, namely the shrinking pool of investment trust opportunities on the market.

There were 279 trusts on the London market at the end of May 2025 compared to 337 names three years earlier, according to data from the Association of Investment Companies. That represents a 17% decline since May 2022. There are now fewer trusts on the market than 10 years ago, which is quite remarkable when you consider how they’re increasingly popular with retail investors.

Who has received takeover bids this year?

We’ve already had three times as many investment trust takeover bids this year than in the whole of 2024.

Investment trusts receiving takeover bids so far in 2025
Assura
BBGI Global Infrastructure
Care REIT
Downing Renewables & Infrastructure Trust
Fidelity Japan Trust
Harmony Energy Income Trust
Henderson European Trust
The PRS REIT
Urban Logistics
Warehouse REIT
Source: AJ Bell, company announcements

Fidelity has been on the giving and receiving ends of bids this year with two of the trusts it manages. Earlier this year Fidelity Japan Trust was targeted by sector peer AVI Japan Opportunity Trust but rejected the bid. The trust then said it would hold a beauty parade to take over running the company when the current manager retires later this year.

More recently, Fidelity European Trust moved on Henderson European Trust and proposed they would be better off together. It was pitched as a merger but in reality, this is a takeover. In February, Henderson European Trust launched a review of options for its future and has now concluded the tie-up with Fidelity is the best outcome for shareholders.

We’ve seen bidding wars for several trusts including Harmony Energy Income Trust where both Foresight and Drax tried to buy it.

The highest profile takeover situation

The biggest drama has been found with medical centre property owner Assura where two parties are still fighting for ownership. Private equity group KKR originally sniffed around the trust in conjunction with Universities Superannuation Scheme (USS), a pension scheme that already had a joint venture with the target. USS quickly went away and was replaced by Stonepeak as KKR’s bid partner.

A rival business called Primary Health Properties (PHP) wasn’t going to let a big opportunity disappear in a flash and it’s been counterbidding ever since. While KKR has offered more money than PHP, certain Assura investors would prefer the latter wins the bid as it would mean they still get investment exposure to the company as PHP has a listing in London.

Investors might benefit from the takeover premium to the market price but they also need to think about what they’re giving up in terms of future potential returns if that stock remained in their portfolio.

Why are takeovers happening?

The property and renewable energy sectors have been hotspots for investment trust takeovers this year. Both sectors had been out of favour – property because of higher interest rates and renewable energy thanks to a mixture of factors including investors losing appetite for all things green. Many stocks traded on large discounts to net asset value and that’s lured in bidders.

Takeovers are also being driven by various sub-scale investment trusts realising they either need to get bigger or admit defeat and return money to shareholders. For years the investment market has been full of sub-£200 million trusts that didn’t gain traction. Many investors, particularly institutional ones, won’t touch trusts below a certain size, so trust boards have now been forced to make hard decisions.

The step-up in activist investor activity has also put pressure on trust boards to either improve performance, narrow discounts to net asset value, or take trusts in a new strategic direction. US activist Saba was deemed a menace when it tried to drive widespread changes in the market six months ago. While its campaigns weren’t successful, they did provide a wake-up call for large parts of the investment trust industry.

This FTSE 250 investment trust’s yielding close to 13%! But can it last?

Our writer takes a look at a FTSE 250 stock that’s currently yielding nearly 13%. And he considers what this could mean for a long-term investor.

Posted by James Beard

Published 16 June

SEIT

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

SDCL Efficiency Income Trust (LSE:SEIT) is a FTSE 250 member that invests exclusively in the energy efficiency sector. It seeks to deliver cheaper, cleaner and more reliable solutions to commercial, industrial and public sector users. Its portfolio comprises everything from roof-top solar installers to providers of energy-efficient lighting.

For the year ended 31 March (FY25), it declared a dividend of 6.32p a share. This means the stock’s currently (16 June) yielding 12.8%. In cash terms, its FY25 payout is 14.9% higher than in FY21.

But some of its impressive yield has resulted from a significant fall in its share price. At 31 March 2021, the trust’s shares were changing hands for 112p. Today, one can be bought for 49p, that’s 56% lower.

If the share price was the same today as it was at the end of FY21, the stock would be yielding 5.6%. Although not as impressive, it’s still above the FTSE 250 average.

Buyer beware

But a high-yielding share needs to be examined closely. Before parting with my cash, I’d need to be satisfied that the share price decline is a temporary blip rather than an indicator of a more fundamental problem.

At the moment, the trust’s shares are trading at a 46% discount to its net asset value. And the situation appears to be getting worse. The average discount over the past 12 months has been 39%.

A variance is common for investment trusts, especially ones like SDCL that invest primarily in unlisted businesses. It’s difficult to determine accurate valuations when there’s no active market for a company’s shares. However, a 46% discount appears to be wider than most.

But I can’t find any obvious explanation as to why the trust’s shares appear so unloved, other than I think it’s fair to say that the sector as a whole has struggled with rising interest rates – most (including SDCL) have to borrow to fund their expansion.

However, sentiment could be about to turn.

Looking ahead

That’s because investment trusts are a great way of diversifying risk through one shareholding. And diversification’s important during periods of economic uncertainty, like the one we are currently experiencing.

SDCL has over 50 positions (spread across three continents) in companies operating in different sub-sectors of the energy efficiency industry.

And the switch away from fossil fuels and the greater emphasis on cleaner energy’s likely to help its portfolio. However, with relatively low energy prices at the moment, the transition may temporarily slow. But the trust appears to be operating in an industry that’s going to grow over the long term. Net zero’s here to stay.

The trust also has a “progressive” dividend policy which means it seeks to increase its payout every year. Since its IPO in 2018, this target’s been met. Although I see no obvious imminent threat, payouts are never guaranteed and this ambition could come under pressure if the trust’s underlying assets fail to perform as expected.

However, if I’m correct about it being in the right sector at the right time, then its share price could soon start to rise. And this means the stock’s yield is likely to fall. The near-13% return will then be a distant memory. But mindful of this, I think it’s a share that investors could consider adding to their long-term portfolios.

SEIT

A hold for the Snowball.

£20k in savings? Discover how to unlock a £1,200 second income overnight

Thousands of UK investors use their spare savings to earn a second income from dividend-paying stocks. Mark Hartley outlines a simple strategy.

Posted by

Mark Hartley

Published 24 June, 6:25 am BS

ADM

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.Read More

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.

For anyone with £20,000 in spare savings, the idea of earning a second income might sound too good to be true. But with a smart approach and the right selection of dividend stocks, it’s entirely possible to start generating passive income almost immediately. 

And in today’s high-yield environment, it may be one of the most efficient ways to put idle cash to work.

By investing in dividend-paying stocks, investors can earn passive income while retaining capital and possibly benefiting from growth. Keeping in mind, of course, that dividends aren’t guaranteed and share prices can fall.

How to build an income from dividend stocks

Consider picking reliable large-cap FTSE 100 companies with stable cash flows and strong track records of payouts. These are often household names with diversified revenue streams.

Look for yields above the Footsie average of around 3.6%. There are plenty of dependable companies that offer more. With a thoughtfully constructed portfolio, an investor could aim for an average yield of 6%.

Setting aside £20k with a target yield of 6% and invested wisely, it would generate £1,200 over 12 months — an overnight second income.

Investing via a Stocks and Shares ISA means dividend income and capital gains are tax-free, maximising the overall returns.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

So which stock might fit the bill?

One stock that looks particularly appealing right now is Admiral Group (LSE: ADM). The FTSE 100 insurer currently offers a dividend yield close to 6%, supported by a healthy payout ratio of around 88%. What stands out is the consistency of its dividend performance. Over the past year, the group’s delivered average dividend growth of 86% — driven by a recovery in profitability and strong underwriting performance in its core UK motor insurance division.

Admiral doesn’t look expensive either. The shares trade on a price-to-earnings (P/E) ratio of roughly 15, in line with the broader insurance sector. The company’s market capitalisation has climbed 31% over the past year, reflecting renewed investor confidence and solid financial performance. Operationally, the business continues to impress, with an operating margin of 17% and return on equity (ROE) exceeding 50% — well above most of its peers.

That said, the UK insurance sector isn’t without challenges. Rising claims costs, regulatory oversight and competitive pricing pressures continue to weigh on margins. Admiral also faces intense competition from larger rivals like Aviva and Legal & General. On top of that, the group’s in the process of divesting its US business, a move that could reshape its growth outlook, depending on execution. There are also concerns that recent profits may have been flattered by one-off factors, meaning future earnings could return to more typical levels.

Nonetheless, Admiral’s combination of yield, earnings quality and market share suggests it could be a valuable anchor in a second income portfolio. For long-term investors seeking a tax-efficient way to generate extra cash, this FTSE 100 stalwart’s certainly worth considering.

A £1,200 second income might not be life-changing on its own, but it’s a solid step towards greater financial freedom. With the right mix of dividend stocks, it’s surprising how quickly the compounding gains can build into significant wealth.

Ed Warner, Chair of FGEN, said:

“Despite a challenging geopolitical and macroeconomic backdrop, FGEN has demonstrated resilience over the period, with strong distributions from the portfolio which have provided a firm foundation to the 2.1% uplift in the dividend target from 7.80 pence to 7.96 pence.

“Our performance continues to be centred on disciplined capital allocation, robust income growth, and value accretive asset management. Our tenth consecutive year of record cash distribution, underpinning sustainable dividend coverage, reflects the strength and resilience of our portfolio.

“As announced earlier this month, the Board has conducted a rigorous review of the Company’s future strategy following consultation with independent external advisors and shareholders to deliver the best possible value in the long term. The Board concluded that shareholders are best served by the proactive management of the existing portfolio with a refocused investment strategy that reflects the structural changes in macroeconomic conditions in recent years. Looking ahead, the Company will prioritise stable, long-term cash flows from core environmental infrastructure assets to deliver predictable income to our shareholders, alongside fresh opportunities for growth.

“We continue to believe that our investment strategy – investing across renewable energy generation, other energy infrastructure and sustainable resource management – offers the best opportunities for investors while contributing significantly to the energy transition in our priority markets.  Environmental infrastructure continues to be one of the most significant investment opportunities of this generation and FGEN’s strategic mandate ensures it is uniquely placed to capitalise on this.”

Current yield 9.5%

Current discount to NAV 25%

A hold for the Snowball.

Thursday 26 June

AVI Global Trust PLC ex-dividend date
BioPharma Credit PLC ex-dividend date
Caledonia Investments PLC ex-dividend date
Chelverton UK Dividend Trust PLC ex-dividend date
JPMorgan Global Emerging Markets Income Trust PLC ex-dividend date
Lowland Investment Co PLC ex-dividend date
Montanaro European Smaller Cos Trust PLC ex-dividend date
North American Income Trust PLC ex-dividend date
Personal Assets Trust PLC ex-dividend date
Residential Secure Income PLC ex-dividend date
Sirius Real Estate Ltd ex-dividend date
Templeton Emerging Markets Investment Trust PLC ex-dividend date
TR Property Investment Trust PLC ex-dividend date
Value & Indexed Property Income Trust PLC ex-dividend date

Remember if you buy an UK GILT below it’s issue price (£100) and hold to maturity you will not lose any of your hard earned.

The alternative for a rainy day fund is a Money Market fund where you would currently earn more than the Gross Redemption yield of 3.75%.

But if you want to sleep soundly at night and not worry about interest rates, an option for your Snowball.

The other option to lower your risk is to pair trade with a higher yielder, where currently a Trust like SEIT would reward you strategy.

Tony Roper, Chair of SEIT, said:

“SEIT’s operational performance was generally in line with expectations in the year, with the portfolio delivering its targeted distributions to fully cover the dividends for our shareholders.

“While dividends have increased and operational performance has improved, we, like many of our peers, remain frustrated that our share price has drifted down and our shares continue to trade at a material discount to NAV per share. The status quo is clearly unsustainable.  With this in mind, we have announced today that the Board are considering all strategic options to deliver value for all shareholders in an effective and efficient manner.”

Jonathan Maxwell, CEO of SDCL, the Investment Manager said: 

“SEIT’s large and diversified portfolio demonstrated resilience amidst global economic and geopolitical uncertainty. The portfolio delivered growing operational performance, in line with expectations, to fully cover dividends, despite significant CapEx during the year. Thanks to recently agreed portfolio-level debt financing facilities, the focus going forward should be less on investing and more on delivering increased operational performance.

“Structural trends such as persistently high energy prices and increasingly unstable grids reinforced the value proposition of SEIT’s decentralised energy efficiency assets during the year. Expected growth in US industry and data centre construction globally should represent operational tailwinds moving forward.

“Current market dynamics continue to significantly impact share prices across the infrastructure and renewable energy investment trust sector, and SEIT has been no exception. We have intensified efforts to position SEIT’s assets for NAV growth, and the Company’s balance sheet has been optimised. We are also progressing opportunities across the portfolio to release liquidity, reduce gearing and recycle capital, as we to seek to protect and crystallise shareholder value.”

AMLP: Growing The Dividend, Which Is Generating A Large Single-Digit Yield

AMLP: Growing The Dividend, Which Is Generating A Large Single-Digit Yield 

Jun. 16, 2025

Alerian MLP ETF (AMLP)ET, EPD, AMLP52

Steven Fiorillo

Summary

• AMLP offers high-yield exposure to America’s energy infrastructure, benefiting from surging energy demand driven by AI and data center expansion.
• Midstream MLPs in AMLP are insulated from commodity price swings via fee-based contracts, ensuring stable cash flows and attractive dividend growth.
• Major holdings like ET and EPD are expanding capacity to meet rising demand, supporting long-term capital appreciation and increasing distributions.
• Despite sector-specific risks, I remain bullish on AMLP as falling rates and growing energy needs make it a compelling income and growth investment.

4 Diversified ETFs That Send You a Check Every Month (No Stock Picking Needed)

David Moadel

Published: June 19, 2025 9:57 am

Key Points

JEPQ and QQQI offer hefty yield and broad technology sector exposure.

DIVO and SPYI also provide good yield, but they also feature multi-sector diversification.

Exchange traded funds (ETFs) can benefit investors in multiple ways. They can immediately diversify your portfolio by providing exposure to a wide variety of stocks. Plus, some ETFs offer fabulous dividend yields and pay monthly distributions so you can grow your wealth quickly.

The passive income ETF revolution is here and it’s unstoppable. Are you ready to board the high-yield train with four fantastic funds that pay cash every month? To make it all easier to digest, I’ll divide the ETFs into two categories and you can try some or even all of them.

Two Tech-Focused Funds

Today’s topic is diversified ETFs that send you a check (in the form of a cash distribution to your investment account) every month. These ETFs are convenient because the fund managers do all of the stock picking for you.

Large-cap technology stocks tend to perform well over the long run. Therefore, I would like to feature two ETFs that provide big monthly cash payouts but also concentrate on tech stocks.

JEPQ

$52.75

▲ $24.18(45.84%)5Y

Don’t get the wrong idea, as these funds are focused but are also diversified. For example, the JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ) is centered around the NASDAQ 100 index and comprises 108 stocks.

JEPQ’s holdings include many large-cap technology names that you’ll surely recognize. You’ll find tech leaders like Amazon (NASDAQ:AMZN), NVIDIA (NASDAQ:NVDA), Broadcom (NASDAQ:AVGO), Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), and Meta Platforms (NASDAQ:META).

Like the other ETFs discussed here, the JPMorgan Nasdaq Equity Premium Income ETF uses option trading strategies to juice more yield for the shareholders. Don’t worry if you’re not familiar with complex options strategies, as you can let the fund managers handle that.

You’ll have to pay expenses totaling 0.35% per year, which will automatically be deducted from the share price. On the other hand, the JPMorgan Nasdaq Equity Premium Income ETF features a rolling 12-month dividend yield (which is similar to an annual dividend yield) of 11.36%. So, the annual expenses aren’t too band when you consider JEPQ’s diversification and high yield, which is distributed on a monthly basis.

QQQI

$51.06

▲ $12.27(24.03%)5Y

A similarly tech-centered fund that pays you every month is the NEOS NASDAQ-100 High Income ETF (NASDAQ:QQQI). This ETF includes approximately 100 stocks in its holdings, and it revolves around the NASDAQ 100 index, much like the JEPQ ETF does.

The percentage weightings toward Microsoft stock, Apple stock, and other tech leaders vary slightly between JEPQ and QQQI. The main differences, really, are the yield and the expenses/fees.

The NEOS NASDAQ-100 High Income ETF involves an expense ratio (i.e., annual fees) totaling 0.68% of the share price. However, the QQQI ETF’s current annual distribution rate is an eye-catching 15.35%, so the monthly payouts can be substantial with this fund.

Two Multi-Sector ETFs

JEPQ and QQQI are great for investors seeking tech sector exposure and monthly paychecks. However, to de-risk your portfolio, it’s a good idea to add some ETFs that pay monthly dividends but also diversify beyond the technology sector.

DIVO

$41.43

▲ $34.93(84.31%)5Y

To that end, I’ve got three terrific monthly payers that include some technology stocks but also involve a variety of non-tech-focused names. The first of these three picks is a passive income powerhouse called the Amplify CWP Enhanced Dividend Income ETF (NYSEARCA:DIVO).

You’ll find technology giant Microsoft stock in the DIVO ETF’s holdings. Yet, the fund has 34 diversified holdings in total, including the stocks of non-technology firms like McDonald’s (NYSE:MCD), Goldman Sachs (NYSE:GS), Procter & Gamble (NYSE:PG), and Chevron (NYSE:CVX).

DIVO’s annual expense ratio is 0.56%, and the fund’s distribution rate is 4.81% per year, which is broken down into monthly cash payments. The annual yield might not be huge, but there’s a safety factor here as the Amplify CWP Enhanced Dividend Income ETF provides exposure to reliable, “steady Eddie” businesses like Visa (NYSE:V), JPMorgan Chase (NYSE:JPM), and Caterpillar (NYSE:CAT).

SPYI

$49.61

▲ $20.29(40.90%)5Y

Finally, we can really ramp up the diversification factor with the NEOS S&P 500 High Income ETF (BATS:SPYI). This fund invests in stocks that you’ll find in the S&P 500 index, and its holdings include around 500 stocks from many different market sectors.

This means SPYI comprises tech names like Microsoft and NVIDIA, but also a slew of stocks from various fields. Some examples include Coca-Cola (NYSE:KO), McDonald’s, Bank of America (NYSE:BAC), Exxon Mobil (NYSE:XOM), and Home Depot (NYSE:HD).

The NEOS S&P 500 High Income ETF deducts an annual expense ratio of 0.68% but provides a head-turning distribution rate of 12.5% per year. The distributions are paid out each and every month, so the SPYI ETF is an enticing portfolio diversifier that can be mixed and matched with JEPQ, QQQI, and/or DIVO.