Investment trusts can be one of the most effective means of investing in high-growth sectors like tech. These six trusts can offer you exposure.

By Dan McEvoy

Published 5 days ago

Jump to category:

• Scottish Mortgage
• Polar Capital
• Allianz Technology
• Schiehallion
• Herald
• Manchester and London

Technology, and its ever-present subsector artificial intelligence (AI), are perhaps the hottest topics in investment – and have been for several years.

Information technology officially accounts for 32% of the MSCI ACWI Index. Yet in reality, what we’d all intuitively think of as ‘tech’ companies account for a greater proportion of this, since MSCI officially designates companies like Alphabet, Amazon, Meta and Tesla into industry sectors other than information technology.

This concentration brings risks with it. Passive tracker funds act to condense stock markets into the biggest names, and investors therefore run the risk of being over-exposed to the sector – which can exhibit volatility when times get tough.

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There is also the intensely competitive nature of tech growth to contend with. Nascent, disruptive technologies like AI can create as many losers as winners, if not more. Knowing which stocks to invest in can be difficult, even for the professionals.

An investment trust – which is by definition actively managed – has the potential to mitigate some of these risks, and the vehicles offer some structural advantages too.

“The closed-ended nature of investment trusts makes them well-suited to technology investing,” said Alex Trett, investment trust research analyst at Winterflood Securities.

“The permanent capital allows managers to take a genuinely long-term approach, supporting investments in private companies and giving them the patience to see investment theses play out over time.

“The structure can also facilitate exposure to smaller-cap technology businesses, where liquidity can be a constraint for other investment vehicles. In addition, it enables managers to build concentrated, high-conviction portfolios, allowing them to express their strongest investment ideas.

Here’s six of the best-known investment trusts that can offer you exposure to some of the world’s most innovative technology companies.

Scottish Mortgage

Just as many ‘big tech’ companies aren’t designated tech, one of the biggest investment trusts that many people think of as ‘tech-focused’ isn’t actually a technology trust.

Scottish Mortgage (LON:SMT) aims to own “the world’s most exceptional public and private growth companies”. As it happens, a lot of these are tech companies, but the trust emphasises that its focus is on long-term growth potential, whatever sector that may be in.

Still, buy Scottish Mortgage now and you’ll get a lot of tech. As of 30 June, SpaceX accounted for over 25% of the portfolio, followed by Taiwan Semiconductor (6.4%), Nvidia (5.0%) and TikTok’s owner Bytedance (4.2%).

ByteDance and, until recently, SpaceX have exemplified part of the appeal of SMT: its ability to hold private companies alongside publicly listed ones, tapping into the future growth potential they offer. The heavy weighting towards SpaceX is largely a consequence of this and its recent initial public offering (IPO); Trett expects the position to be trimmed once lock-up periods permit.

Symbol	Market cap (£ million)	Discount / premium (%)	1yr share price return (%)	10 yr share price return (%)	Dividend yield (%)
SMT	17,009	-8.5	27.8	403.0	0.34

^{Source: Association of Investment Companies, as of 21/07/26.}

Polar Capital Technology

Polar Capital (LON:PCT) has focused its approach on the hardware and infrastructure underpinning the buildout of artificial intelligence (AI).

“The managers believe these areas offer greater earnings visibility and forecastability, with semiconductors representing the largest exposure at 44% of the portfolio, followed by equipment, components and storage including Advanced Micro Devices and LAM Research,” said Trett.

Symbol	Market cap (£ million)	Discount / premium (%)	1yr share price return (%)	10 yr share price return (%)	Dividend yield (%)
PCT	7,233	-9.2	62.6	847.2	0.0

^{Source: Association of Investment Companies, as of 21/07/26.}

Allianz Technology Trust

All of these trusts are listed in the UK, but Allianz Technology (LON:ATT) is distinctive in having its management team based in San Francisco, giving it close access to many of the companies in its portfolio – approximately 90% of which is allocated to North America, as of 30 June.

“The portfolio provides broad exposure across the technology and AI ecosystem,” said Trett.

“The managers have highlighted the role of technology in creating differentiation across a wide range of industries [and] believe the AI opportunity is continuing to broaden beyond the initial infrastructure buildout, supporting a more diversified and durable phase of growth across the technology sector”.

Symbol	Market cap (£ million)	Discount / premium (%)	1yr share price return (%)	10 yr share price return (%)	Dividend yield (%)
ATT	2,582	-8.8	49.6	875.1	0.0

^{Source: Association of Investment Companies, as of 21/07/26.}

Schiehallion

Like Scottish Mortgage, Schiehallion (LON:MNTN) is managed by Baillie Gifford and, depending on how pedantic you’re feeling, isn’t technically a technology investment trust.

But it has an interesting focus on early-stage companies – even more so than SMT, given that it invests in later-stage private companies.

“While not a dedicated technology fund, technology represents around 47% of the portfolio, with holdings including Anthropic, Bending Spoons, SpaceX, ByteDance and Databricks,” said Trett.

Symbol	Market cap (£ million)	Discount / premium (%)	1yr share price return (%)	10 yr share price return (%)	Dividend yield (%)
MNTN	2,031.67	-15.37	69.0	N/A	0.0

^{Source: Association of Investment Companies, as of 21/07/26.}

Herald Investment Trust

Again, Herald Investment Trust (LON:HRI) technically belongs in the Global Smaller Companies category, but it has a strong focus on technology and communications companies.

It was the subject of a bid from Saba Capital Management to displace its board, which led to a tender offer and for the trust to become part of Aberdeen.

Trett picks out Super Micro Computer, BE Semiconductor Industries, Celestica and Fabrinet as among its key holdings.

Symbol	Market cap (£ million)	Discount / premium (%)	1yr share price return (%)	10 yr share price return (%)	Dividend yield (%)
HRI	565.46	-11.3	21.7	305.1	0.0

^{Source: Association of Investment Companies, as of 21/07/26.}

Manchester and London

Some people use investment trusts to diversify away from big tech concentration. Manchester & London (LON:MNL) is an investment trust for people that want to lean into it.

The fund takes a concentrated approach to investing and predominantly holds large-cap stocks, with AI a high-conviction play for the managers.

“The fund’s concentrated portfolio allows it to hold significant positions in its preferred ideas; Nvidia represented 43.6% of net assets in January before being subsequently reduced to 9.0% as at 30 June,” said Trett.

Symbol	Market cap (£ million)	Discount / premium (%)	1yr share price return (%)	10 yr share price return (%)	Dividend yield (%)
MNL	498.75	-25.29	19.0	429.4	2.9

^{Source: Association of Investment Companies, as of 21/07/26.}

Four experts have their say

Our asset allocation panel share their views on the areas where they are bullish and bearish.

22nd July 2026

by Jim Levi from interactive investor

Artificial intelligence (AI) is the fastest-adopted technology in history. Worth a mere $95 billion (£70 billion) just five years ago, it is projected to be worth $1800 billion by the end of the decade and perhaps $4800 billion by 2033. No wonder then that AI – and the investment opportunities and pitfalls it may create – is much on the minds of our panel of four fund managers.

• Our Services: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

The so-called Magnificent Seven stocks – Apple Inc AAPLAmazon.com Inc  AMZNAlphabet Inc Class A GOOGL (Google), Microsoft Corp MSFT, Meta Platforms Inc Class A META, NVIDIA Corp NVDA and Tesla Inc TSLA – are all heavily involved and they make up about one-third of the total value of Wall Street’s S&P 500 Index.

But the impact of AI is global and in relative terms it is making an even bigger impact on equities in emerging markets – particularly Taiwan and South Korea. This has led to the creation of a new list of seven leading stocks called the Semiconductor Seven – all of them quoted in Far East markets – and led by Taiwan Semiconductor Manufacturing Co Ltd ADR  TSM

 Samsung Electronics Co Ltd DR  SMSN

and SK hynix Inc ADR SKHY

These companies whose customers include the Magnificent Seven in the US are already making large profits out of supplying chips for AI.

Has Big Tech overspent on AI?

But there are question marks over the huge costs of building the data centres for AI and how profitable the business might be for the likes of Apple, Alphabet and Microsoft.

According to Rob Burdett at Nedgroup Investments, AI “has created a huge cloud of uncertainty and the market is reacting accordingly”.  The stock market ratings for the likes of Amazon, Microsoft and Nvidia are now cheaper than those of low tech stocks such as Coca-Cola HBC AG  CCH and McDonald’s Corp  MCD

He points out that the cash flows of the Magnificent Seven at the end of last year was $300 billion and is now nearer $50 billion because of the heavy investment in data centres.

“The amount of money being spent on data centres for AI has overtaken all the money being spent on commercial property in the US,” Burdett claims.

Where does that leave the stance of our panel of four fund managers on Wall Street?  As usual, our scorecard shows a mixed reaction. Burdett himself has lowered his score for US equities from seven to five. “Back in April I raised my US equities score from four to seven and that worked well,” he says. “But at this point I don’t want to be overweight Wall Street.”

At Schroders Dorian Carrell supports Burdett’s caution taking his score down from six to four. “We think there is better value elsewhere,” he says.

David Coombs at Rathbones takes the opposite route in raising his score for US equities from six to eight. “I think we will start to see the market begin to anticipate a cut in American interest rates early next year,” he says. “Meanwhile, there is a widening of interest in smaller US companies and in stocks outside the Magnificent Seven.”

But even he admits he cannot dodge the central question: “Is AI going to make money for those leading companies or is it going to prove too costly?”

Emerging market enthusiasm wanes

The overall mood of caution among the panel members is reflected in rising cash scores. Burdett was already scoring eight but both Coombs and Carrell have boosted their cash score to five. “We all remember that the autumn is a favourite time for big stock market corrections,” Burdett warns.

Craig Hoyda, investment director at Aberdeen standing in again for Max Macmillan, makes only one change in his equities scores by going from an overweight seven to a neutral five on emerging markets. “We have seen incredible volatility in Asian markets – particularly Taiwan and South Korea, which now dominate the emerging markets space,” he says.

“This volatility and concentration on just a few dominant AI-related stocks makes us cautious.”

Coombs is even more cautious, lowering his emerging markets score from seven to four and even Carrell who scored a nine for the sector back in April has edged his score slightly lower to eight. Overall, the average score for emerging market equities is down from 7.5 to 6. Carrell himself is suggesting a recovering Chinese economy may take up some of the running in the sector in the coming weeks. “Overall, we think emerging markets will continue to do well,” he says. 

Views on UK, Europe and Japan

There is a two-way pull going on in UK equities. On the one hand, there is a steady stream of foreign bids for leading UK companies – 

Tate & Lyle  TATE

 Schroders  SDR

easyJet EZJ and a big chunk of ITV  ITV among them – which indicate that in the eyes of overseas investors at least our domestic equity market looks cheap. 

On the other hand is the reality of a sluggish economy and continued uncertainty about the plans of the new Andy Burnham government. Three of the four panel members score a neutral five. Carrell says: “The noises we have heard so far from the Burnham camp do not indicate plans that are constructed for long-term growth. And that is what the country needs.”

Only Coombs is underweight in European equities –  lowering his score from four to three with his concerns that Chinese competition is damaging German car manufacturing, but Burdett keeps his score at eight. “Our positive view is about the revival of the German economy through extra defence spending and European equities are certainly not expensive compared with US shares,” he says.

Again Coombs is the odd man out in Japanese shares leaving his score an underweight four. Burdett, a long-term bull of Japan lowers his score from eight to seven, while both Aberdeen’s Hoyda and Carrell at Schroders keep their scores at seven. The one blot on the Japanese equities landscape is the continued weakness of the yen against the dollar. “Our score would be higher if the Bank of Japan took some action and the weakness of the currency ended,” says Carrell.

Hoyda makes an intriguing prediction that UK interest rates will be reduced by the end of the year and in anticipation he has raised his UK bonds score from five to seven. Other panel members are less confident that inflation will be more under control by then but there are no other changes in scores for either UK or global government bonds.

However, Hoyda has some indirect support for his belief that lower inflation and lower interest rates may soon be on the way from Burdett, who tops up his score for gold to eight. “Central banks are still buying gold and lower interest rates would be good news for the yellow metal,” he says.

Corporate bonds remain the lowest-scoring sector although Coombs has decided to double his score from one to two. “We recently bought one AAA-rated corporate bond,” he says.

One final positive note is that although the battle between the US and Iran over the Strait of Hormuz rumbles on, all the panel members agree that the impact it has so far had on energy supplies and inflation has not been as bad so far this summer as had been feared. That has kept markets upbeat, with overweight positions in both equities and government bonds for the most part being maintained. Overall, the mood seems to be one of subdued optimism.

Note: the scorecard is a snapshot of views for the third quarter of 2026. How the panellists’ views have changed since the second quarter of 2026: red circle = less positive, green circle = more positive. Key to scorecard: EM equities = emerging market equities. 1 = poor, 5 = neutral and 9 = excellent.

Panellist profiles

Rob Burdett is head of multi-manager with Nedgroup Investments.

Dorian Carrell is head of multi-asset income at Schroders.

David Coombs is head of multi-asset investments at Rathbones.

Max Macmillan is head of strategic asset allocation at Aberdeen.

Thursday 30 July

Alternative Income REIT PLC ex-dividend date
BlackRock Smaller Cos Trust PLC ex-dividend date
Brunner Investment Trust PLC ex-dividend date
CQS New City High Yield Fund Ltd ex-dividend date
Ecofin Global Utilities & Infrastructure Trust PLC ex-dividend date
European Smaller Cos Trust PLC ex-dividend date
GCP Asset Backed Income Fund Ltd ex-dividend date
Gore Street Energy Storage Fund PLC ex-dividend date
Henderson Far East Income Ltd ex-dividend date
M&G Credit Income Investment Trust PLC ex-dividend date
Montanaro European Smaller Cos Trust PLC ex-dividend date

Second Largest Negative Signal Of 2026: Bubbles, Barrels, And Skew

Jul 26, 2026, 6:13 AM ETS&P 500 Index (SP500), SPX, DJI, NDX, SPY, DIA, QQQ, IVV, VOO, IWMAAPL, MSFT, AMZN, META, SKHY, GDXU, KORU, SOXL, MU, INTC, ZMET:CA, ZMIC:CA, ZINT:CA, ZMSF:CA, ZAAP:CA, MU:CA, MSFT:CA, META:CA, INTC:CA, AMZN:CA, AAPL:CA

JD Henning

Investing Group Leader

Summary

• Market timing is critical; current momentum gauges signal elevated risk and negative flows since the July 10th S&P 500 high.
• Semiconductor sector, including SOXL and MU, shows classic topping patterns with steep declines despite record earnings, raising valuation concerns.
• Oil price volatility and geopolitical events are driving inflation and increasing pressure on the Fed for a possible rate hike.
• Extreme S&P 500 PEG ratios and high leverage signal caution; proven value and momentum models, along with timing indicators, are essential for capital preservation.
• The Federal Reserve rate decision and guidance this week will be key as pressure rises to hike rates again and 751 stocks report earnings including Apple and Microsoft.
• This idea was discussed in more depth with members of my private investing community, Value & Momentum Breakouts. 

Introduction

As “bandwagon” investors join any party, they create their own truth – for a while. ~ Warren Buffett

Timing matters, and it matters greatly. I have spent the last 35 years trading, researching, and constructing algorithms to identify and leverage the value across fundamental, technical, and behavioral finance models. Of the ten portfolio models designed for optimal portfolio mixes for members to beat the market at Value & Momentum Breakouts, eight come from enhancing well-tested anomaly research in published financial journals. All of the models continue to outperform the S&P 500 in live forward testing for nearly 10 years here on Seeking Alpha, and again this year.

The 2nd Negative Signal of the Year

Readers who follow my Momentum Gauge indicators know well that timing matters and protecting your capital is a valuable way to preserve time on your way to building wealth.

On the weekly S&P 500 gauges we have gone through 3 weeks of negative signals from the July 10th market high down a modest -2.41% so far. The three prior negative signals on the weekly chart back to February 2025 saw declines of:

• Feb 28 to Apr 25: S&P 500 declined -9.69%
• Nov 14 to Nov 21: S&P 500 declined -2.72%
• Jan 30 to Apr 2: S&P 500 declined -6.53%

Even prior to the signal, you can see the positive momentum has been declining for past 8 weeks in an early indicator that outflows from the market are increasing as investors become more cautious. For context, the two strongest positive signals occurred back in April 2025 when the tariff tantrum abated on news that many tariffs would be withdrawn and in April 2026 when it was announced Iran had agreed to a ceasefire. That ceasefire ended back on July 6th and the gauges subsequently turned negative again.

Bubbles, Barrels, And Skew

As we begin the third quarter of 2026 we have already seen some major patterns that are likely to continue the whipsaws across different sectors and investment portfolios. 751 stocks are reporting earnings next week including Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Meta Platforms (META), SK hynix (SKHY) representing over $14 trillion in market cap. Additionally the Federal Reserve meets on Wednesday for their last rate decision until September and pressure is mounting for another hike. This is likely to be a volatile week.

I. Bubbles

Sometimes bubbles leak and sometimes they pop. One of technical indicators of bubbles is that they eventually return to pre-hype price levels where nearly everyone finally agrees the massive gains were part of shorter term overpricing anomaly. One of the most popular charts in circulation shows some of the sensational market bubbles in history.

Just this year we have seen some incredibly large bubble moves. Take for example Gold as shown in the MicroSectors Gold Miners ETN (GDXU) weekly chart below. Back in January as Gold prices touched on all time highs above $5,500/oz, headlines announced “the end of fiat currencies” and a clarion call for “everyone to get into gold now!”

More recently we have seen this classic Head/Shoulder topping pattern emerge in the South Korean market represented by Direxion Daily MSCI South Korea Bull 3x ETF (KORU) with over 40% of its holdings in SK hynix (SKHY) and Samsung Electronics (SSNLF) stock. Tragically, many investors are down nearly -72.1% from the June 1st high.

A illustrative primer on the classic technical pattern of Head and Shoulders is shown below for both bullish and bearish indicators.

There are quite a few more topping signals of sectors this year like Silver, Cotton, Palladium to name a few. However the most consequential for the equity markets is arguably the Semiconductors segment. Direxion Daily Semiconductor Bull ETF (SOXL) shown below reflects over $12 trillion market cap in the semiconductor sector. This fund is down -54.7% from the June 22nd peak with risk of further declines as it approaches a key test of support at $130/share.

This pattern is especially evident within the Semiconductor sector looking at the Micron Technology (MU) chart up +222% YTD with record earnings and sales. How can a stock with such good earnings and sales growth be suffering such large declines? We will look at that in more detail in the “Skew” section of this article below.

Using the multiple discriminant analysis MDA chart below of Micron, we are keeping a close eye on when key variables indicate it may be safe to return to this fantastic company in the days ahead.

Micron Technology daily MDA chart

II. Barrels

One of the most significant and unpredictable economic factors this year is the price of oil. Oil prices can drive significant short term inflation and why fuel costs are excluded from Core CPI focused on long term predictive measures. Nevertheless the rising inflation rates from February to May were largely a product of increasing delivery, travel and production costs related to oil prices.

We have seen exceptionally strong stock market moves from the start of April when the US/Iran Ceasefire was announced. There have also been significant declines in inflation along with the recent decline in oil prices. However, since the termination of this fragile ceasefire on July 6th not only have oil prices rallied by +34% in July but we have seen approximately -7.2% declines in the Nasdaq in the same period.

As inflationary concerns rise again in the short term, we are seeing additional pressures on the Fed to raise rates at their July 29th FOMC meeting. The odds of a rate hike have increased to 34.2% according to the CME Fedwatch tool.

While the Energy sector gauges are positive with five weeks of rising positive MG values and declining negative momentum, we cannot be certain when another exogenous shock related to Iran will occur with escalating attacks or an abrupt ceasefire.

III. Skew

Lastly, as I wrote in my 2026 forecast article “Chasing Bubbles and Riding Value in Another Year Leading the S&P 500” the Buffett indicator was at the highest valuations in over 75 years and still increasing.

Fast forward another 6 months and we can see more clearly the extremes of the current skew as measured by the equal-weighted to market-cap-weighted stocks in the S&P 500. This represents the highest concentration into the fewest mega cap stocks in the index since 2004.

Ok we have seen these charts before, “but this time it’s different!” This time I’m told the record growth and the massive Intel Corp. (INTC) earnings beat deserve to be even higher in price than ever before.

The challenge is not that these phenomenal semiconductor stocks fail to produce record earnings and sales every quarter. The basic concern underlying the current weakness is whether the current prices have gone too high too fast relative to the very best growth estimates.

To better explain what I mean let’s look at the S&P 500 Price to Long Term Earnings Growth ratio. The most recent weekly chart for July shows the most extreme S&P 500 PEG ratio in at least 30 years. So unlike 2020 in the middle of COVID, the prices being paid to own the S&P 500 are the most expensive in many decades relative to the best expected growth. Other charts suggest investors are also the most leveraged in the stock market that they have been in many years.

While it is easy to make a case that the semiconductor giants are delivering earnings results that almost no one has ever seen before, so too are the prices relative to incredible growth estimates. We will see how long they can continue to sustain at these levels even when delivering such positive long term outlooks.

So as we analyze Technology, the largest and most heavily weighted sector on the Major Indices (SPY) (QQQ), we are seeing clear trends in the momentum gauges. For the past 34 trading days from June 5th these sector gauges have been negative. They also reflect a volatile trend of rising negative momentum toward prior peaks at March and February market lows.

The best time to be in the market this year was clearly between April and June, according to the Technology gauges. While this is certainly no guarantee that the negative momentum will match or exceed prior market pullbacks the market risks are extremely elevated.

Conclusion

My main conclusion is to be careful chasing the AI exuberance. Consider some long term proven models from the financial literature that I have tested live on Seeking Alpha going on 10 years. Use timing indicators to minimize downturn losses and preserve capital as you build wealth.

Does earning regular passive income seem out of your grasp? Break it down to a simple, step-by-step plan, and it’s not so daunting after all.

Posted by Mark Hartley

Published 26 July

CTY

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

You might think £20 a day is a bit of a weak passive income stream. But over a year, that’s an extra £7,300 of spare cash earned while you sleep. That would go a long way to covering a mortgage, building a retirement pot, or just funding an extravagant holiday.

So how can a UK investor build such an income?

Aiming for optimal growth

If you don’t already have a Stocks and Shares ISA, that’s a smart first step. Invest up to £20,000 a year in shares, ETFs or bonds without paying any tax on the capital gains or dividends. Seems like a no-brainer to me.

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.

Next, decide how much you need to invest each month depending on your timeline. For example, a 6%-yielding portfolio of dividend shares worth £121,666 could pay out £7,300 a year. Push that yield up to 7% and you’d need just £104,285.

Okay, it isn’t a small amount – but it’s achievable.

Let’s say you already have £10,000 in savings and put in an extra £300 a month. Stick to the plan, reinvest all dividends, and it could take 14-15 years.

Too long? Pump up your monthly contributions to £500 and it could take just 10 years. And that’s using a conservative annual total return of just 7%. Catch a few good years and hit a 9% average, that drops to just nine years.

That’s a short time period to build a big enough portfolio to earn decent income. But what’s the chances an average investor could pull that off? It all comes down to stock selection.

Picking top-quality shares

There’s a popular phrase: “past performance is not indicative of future results“. While this is certainly true, history still has a place. I’m more likely to trust a stock that’s been paying dividends for 20 years, than one that’s been paying for two years.

Any company can cut dividends at any time. Sometimes, it’s a necessary evil — if profits dip, cash must be preserved. But, ideally, they find ways to continue paying dividends no matter what — this builds trust, and attracts further investment. And the best are those that have grown dividends consistently. A solid, consistently-growing stock with a 4% yield can beat an unsustainable 7% yield over the long run.

For example, City of London Investment Trust (LSE:CTY) is a diversified fund that holds top FTSE 100 shares such as HSBC, Shell, British American Tobacco, NatWest, and Lloyds.

It currently yields around 3.9%, which is impressive when you consider it’s raised the dividend every year since 1966! That’s the longest unbroken growth record of any UK investment trust.

Naturally, its heavy exposure to the UK market puts it at risk. This is most evident in 2008 and 2020, when the price fell around 30%. If falling interest rates hurt bank profits, or an economic downturn hits UK-listed mega-caps, the share price could drop again.

Still, it’s risen at an annualised rate of 4.13% over the past 20 years. So when combined with the dividend, investors could expect an average total return a year of about 8%.

When combined with a few higher-yielding shares like Legal & General, that average would likely rise.

Rhea cn-s15lol-qq.comx WileyCraigwell@gmail.com 104.207.57.24

Superb website you have here but I was curious if you knew of any message boards that cover the same topics talked about here? I’d really like to be a part of group where I can get feed-back from other knowledgeable people that share the same interest. If you have any recommendations, please let me know. Cheers!

You can follow and participate in discussions about shares on platforms like London South East and ADVFN, where investors share news, opinions, and trading insights.

Also CityWire forums.

You may have read if you buy UK Government Gilts, you will not lose money.

If you bought and held to maturity in 2021, you have broke even but after allowing for inflation you have lost money.

Whereas if you bought in 2023, you are better off, even allowing for inflation.

There would have been a small amount of coupon interest paid but it is not material.

Join ii

Ian Cowie: the investment trusts battling for supremacy

Our columnist asks which names could benefit from another defence boost.

23rd July 2026

by Ian Cowie from interactive investor

Shares in arms manufacturers advanced strongly on Tuesday after the appointment of John Healey as chancellor. 

He resigned as defence secretary last month after calling for more spending on the Armed Forces and is now in a position to do something about it.

Nick Britton, research director of the Association of Investment Companies (AIC), assessed the winners among shares listed on the London Stock Exchange and said: “Babcock International Group  BAB

BAE Systems  BA.

 and QinetiQ Group  QQ. shares all rose sharply on the news of Healey’s appointment. 

“The assumption is that the new chancellor’s vocal stance on defence spending points to higher budgets for the military now that he’s moved to Number 11 Downing Street.”

Lizzy Galbraith, senior political economist at Aberdeen Investments, agreed: “New UK Prime Minister Andy Burnham undertook an extensive cabinet reshuffle, with former defence secretary Healey the surprise chancellor.

“His appointment raises expectations of further defence spending commitments. He resigned in June after failing to secure a commitment from the government to raise defence spending to 3% of gross domestic product (GDP) – a measure of economic output - by 2030.”

But picking individual defence shares is risky, as demonstrated by Babcock’s decline earlier this year after it announced a £140 million exceptional charge on its Type 31 Frigate ship-building programme, which is expected to cut operating profits by 19% to £293.3 million. 

By contrast, several investment trusts offer access to this theme with less stock-specific risk. 

Britton explained: “For investors who don’t have time to analyse the merits of individual defence stocks, investment trusts offer exposure to this sector within diversified portfolios.”

For example, BlackRock Greater Europe Ord  BRGE

,with total assets of £639 million, has just over 7% of its net asset value (NAV) invested in listed defence shares, led by Safran SA  SAF

 – the French aerospace company – and MTU Aero Engines AG MTX – the German jet propulsion specialist.

Closer to home, CT UK High Income Ord  CHI

with total assets of £161 million, and JPMorgan Claverhouse Ord  JCH

with assets of £590 million, both have 6.3% of NAV invested in defence. 

Rolls-Royce Holdings RR.

Britain’s biggest aerospace engines manufacturer, which is entirely separate from the luxury motorcar manufacturer of similar name, ranks among the top 10 assets of both funds.

But an urgent need to improve national security is felt most keenly on the Continent, especially among countries bordering Russia after its full-scale invasion of Ukraine. 

European Opportunities Trust  EOT

a £446 million fund, has just short of 6.3% of NAV invested in defence, including Dassault Systemes SE  DSY

the French aerospace technology specialist.

Back in Britain, Schroder UK Mid Cap Ord  SCP

 fund with £265 million in assets, has 5.8% of NAV in armaments manufacturers. Its holdings include the defence technology company Qinetiq, mentioned earlier, and the explosives-maker Chemring Group CHG

But the latter demonstrates the difficulty of investing in single trading companies, despite the favourable backdrop of rising expenditure. Chemring shares suffered a setback last month after it announced weak sales would trim its operating profits by 8%.

Similarly, the recent performance of the above investment trusts varies widely. 

JPMorgan Claverhouse is easily the most successful over the last year with a total return of 24%, following 64% over five years and 160% over the last decade. 

This fund also yields 3.8% dividend income, which has increased by an annual average of nearly 4.2% over the last five years, but it continues to be priced at a modest discount of 2.2% below its NAV.

CT UK High Income is next best among the above five funds for defence exposure, having gained 17% over the last year, following 58% over five years and 115% over the decade. 

Better still, it yields just over 5.1% dividend income, albeit rising modestly by 2.4% per annum, with its ordinary shares priced at par to NAV.

By contrast, despite having the highest allocation of assets to defence among these five, BlackRock Greater Europe is the laggard in this group, having shrunk shareholders’ assets by 0.4% over the last year and minus 2.4% over five years, following a more satisfactory gain of 158% over the decade. 

Its modest yield of 1.8% rising by just over 3% per annum with shares priced 7.6% below NAV might tempt bargain-hunters hoping for recovery.

Seraphim Space Investment Trust Ord  SSIT

which is my third-most valuable holding, is excluded from the above analysis, despite having three-quarters of its NAV allocated to defence technology, because the underlying assets are not listed on any stock market. 

Even after recent setbacks, Seraphim shares are up 80% over the last year and 42% over five years, having been launched in July 2021. 

Looking forward, America’s unpredictable foreign policy in Europe and the Middle East is prompting increased expenditure on defence. 

However much investors might wish for peace, it looks as if violent conflict will continue to produce winners and losers on the stock market as well as the battlefield.

Ian Cowie is a freelance contributor and not a direct employee of interactive investor.

5 Monthly Payers (up to 18.2%) Make “High-Yield Stocks” Look Broke

Brett Owens, Chief Investment Strategist
Updated: July 24, 2026

Why sit around and wait all quarter long for a dividend payment?

Monthly divvies are where the retirement party is at! These income “cheat codes” arrive alongside our bills and recurring expenses. What a concept!

But be careful because some monthly payers don’t pay enough to matter. Take Permian Basin Royalty Trust (PBT), which pays monthly but these divvies add up to just 1.2% annually. Gee, thanks.

$1M Invested in Either Would Pay Under the US Poverty Line

We need monthly payers that are committed to maximizing not just the frequency of shareholder rewards, but the size of the payout. And we need to shoot high—we shouldn’t settle for anything less than what it would take to retire on dividends alone.

Fortunately for us, many monthly dividend stocks fall within the high-yield acronyms: real estate investment trusts (REITs), business development companies (BDCs) and the like.

Today, for instance, I’ve put together a five-pack of monthly dividends that shell out an average of 10.6% annually. That means even half a million bucks evenly invested across them would generate a hefty “salary” of $53,000.

Let’s take a look.

Healthpeak Properties (DOC)
Dividend Yield: 5.4%

I’ll start with Healthpeak Properties (DOC), a healthcare REIT whose roughly 690 properties include outpatient medical facilities and laboratories, which are leased out to biopharma firms, health systems, physician groups, medical device manufacturers and more.

Healthpeak also deals in senior housing, albeit not as directly as it did just a few months ago. In March, DOC spun off that part of the business with an initial public offering of Janus Living (JAN). It wasn’t a full exit, however. Healthpeak not only retained more than 80% of the newly formed REIT, but it also is Janus’s external manager.

A couple months later, DOC received a much-needed jolt after reporting better-than-expected earnings and upgrading its funds from operations (FFO) outlook. Among the reasons for management’s optimism: The senior housing environment is improving, Janus appears primed to aggressively invest, and a weak laboratories market showed small signs that it’s starting to inflect.

And just this week, Healthpeak announced a $2.1 billion joint venture with Brookfield Asset Management (BAM) that will help DOC to pay down nearer-term debt (though it could be a short-term weight on earnings, too).

Healthpeak’s stock has delivered a year-to-date total return of almost 45% thanks to its summer ramp-up. It’s a welcome development for shareholders that have suffered through a decade-plus downtrend. However, new money is now buying a yield that’s well below historical highs and closer to a longer-term middle ground, while the P/FFO has wafted to just above 13—not wildly overpriced, but not discount territory either.

DOC’s Yield Has Dropped to Three-Year Lows

Itau Unibanco Holding (ITUB)
Dividend Yield: 6.2%

Most international companies pay dividends just once or twice a year, and some will even do a lopsided interim-and-final system. That’s practically useless for income planning.

Itaú Unibanco Holding (ITUB) isn’t exactly a conventional payer itself, but it at least doles out something each and every month.

Itaú Unibanco is the largest bank by assets in both Brazil and all of Latin America. It offers consumer banking products like credit cards and loans, but also commercial banking, advisory, real estate lending, life insurance and more. And while it’s headquartered in Brazil, it has operations across the Americas and Europe.

The company has printed bigger top and bottom lines every year since 2020, and it’s coming off a record-breaking first quarter in which it posted a $2.5 billion profit and a return on equity of around 25%. The company is also one of the region’s leaders in digital assets, giving it another potential growth avenue.

ITUB’s distributions are tied to performance, so Itaú Unibanco has increasingly been sharing the wealth with its stockholders. But while it pays much more frequently than most, it still has an odd system.

Itaú Unibanco: Generous but Complex

I’ve written several times about companies with regular-and-supplemental dividend programs. Itaú goes a step farther. The company distributes small monthly payments of “interest on capital” (IOC), but it will also make larger additional IOC payments throughout the year as able, then an actual dividend—usually its biggest payment—once a year.

The monthly payment only comes out to less than half a percent’s worth of yield; the real money is in those larger IOC distributions and the dividend. So while the dividends are a nice sweetener for investors who like ITUB for its growth potential, it’s not an ideal situation for retirement planners reliant on regular income.

Gladstone Investment (GAIN)
Dividend Yield: 9.1%

Let’s shift to business development companies, starting with one that has a regular-and-supplemental system like ITUB (but with a much more substantial baseline of income).

For the unfamiliar: BDCs were created by Congress in 1980 to spur investment in small businesses. Traditional banks often shunned smaller companies, either charging extremely high rates to compensate for the risk or outright refusing to lend to them. Enter BDCs, which provide equity, debt and other financing to small businesses that otherwise might not be able to raise capital.

Gladstone Investment (GAIN), for instance, provides financing to lower-middle-market companies that generate EBITDA (earnings before interest, taxes, depreciation and amortization) of between $4 million and $15 million annually, have attractive fundamentals and are run by strong management teams.

GAIN runs a small portfolio of just 29 investment companies right now, largely clustered in the business/consumer services, consumer products and manufacturing industries. Its investments include Phoenix Door Systems (industrial doors), ImageWorks Display (retail display shelving) and Old World Christmas (holiday-geared retail).

Gladstone Investment also stands out for its deal mix. Like with most BDCs, the majority of Gladstone’s financing is debt-based, and currently, all of that debt is floating-rate in nature. But GAIN is happier than most to deal in equity. Gladstone says the average BDC’s equity exposure is between 5% and 10%; its target is closer to 25%. This shields GAIN from interest-rate declines but puts it behind the 8-ball when rates climb.

There’s plenty to like from an operational standpoint. Net asset value has grown by nearly 30% between its fiscal Q1 and its recently reported fiscal Q4. Return on equity is consistently in the double digits and above peers.

The dividend is best described as “good with the potential for greatness.” GAIN’s monthly dividend comes out to a little less than 6%, which is high compared to the average stock and far better than what ITUB offers, but low relative to the BDC space. However, Gladstone Investment also pays supplemental distributions when it locks in gains from its equity investments.

If Only GAIN’s Gains Were a Bit More Predictable

Right now, for instance, Gladstone Investment has gone roughly a year since its last supplemental. It might pay one later this year. It might do so in early 2027. It might be even longer; it’s hard to tell.

Still, it’s a decent income baseline with the potential for more, and it’s paid out by one of the industry’s better names. Pricing could be better, though, with GAIN shares currently trading right around the BDC’s net asset value.

PennantPark Floating Rate Capital (PFLT)
Dividend Yield: 14.0%

PennantPark Floating Rate Capital (PFLT) is another BDC that provides financing primarily via floating-rate senior secured loans—mostly first lien—but also through some equity and joint venture investments. Its target companies generate $10 million to $50 million in annual EBITDA.

This “value-added” BDC lends its expertise in specific industries, hence its portfolio focus on five categories: healthcare, consumer, business services, government services and software/technology.

Earlier this year, I wrote that PennantPark Floating Rate’s dividend has routinely outstripped its net investment income (NII), and did so again to close out 2025. The company insisted then that it could keep covering the payout.

But PFLT’s Actions Spoke Louder Than Words

PFLT adjusted its monthly dividend program from 10.25 cents per share to an 8-cent regular, as well as supplemental dividends (50% of excess earnings). The first two supplemental dividends since the reduction were 0.33 cents apiece.

But not all dividend cuts are created equally. In the case of PFLT, its dividend cut is more a reflection of lower base rates than any underlying portfolio issues. In fact, the company’s credit quality is high relative to the sector, and sponsor investment activity is improving. Moreover, PFLT continues to trade for a song, priced at a 32% discount to NAV.

Invesco Mortgage Capital (IVR)
Dividend Yield: 18.2%

It’s hard to find better yields than in the mortgage REIT (mREIT) space, where double-digit payouts are the norm.

Mortgage REITs borrow at short-term rates, purchase mortgages paying long-term rates, then pocket the spread. Short-term rates are usually lower than long-term rates. But the ideal scenario is that short-term rates are also declining while long-term rates hold steady or also decline. In that scenario, mREITs’ existing mortgages, which were issued when rates were higher, will yield more than newly issued ones (and thus be worth more). On the flip side, rising rates weigh on the value of existing mortgages.

Invesco Mortgage Capital (IVR), for instance, owns “agency” mortgage-backed securities (MBS) from entities like Fannie Mae and Freddie Mac. These securities feel interest-rate pressure too, but it’s not as great because their MBSs are backed by the agencies, and thus they have virtually no default risk. I’ll also note that rising interest rates reduce the risk of prepayment, mostly because mortgage holders are less likely to refinance.

While Invesco Mortgage Capital yields a mouth-watering 18%, mortgage REITs historically have been prone to unstable dividends, and IVR is no different.

But Its Most Recent “Cut” Is Good News for Investors

Near the end of 2025, IVR announced a modest 6% dividend hike to 36 cents per share to be paid in January. But in January, the company announced it would start to issue monthly dividends of 12 cents per share (so, the same amount each quarter).

Invesco Mortgage Capital has mostly underperformed its peers since COVID, but it has behaved much better over the past year or so. Dividend coverage, per its “earnings available per distribution” (EAD), is fine for now, too. But despite an effectively flat year-to-date performance (even accounting for its massive payout), shares trade at a thin discount to its shrinking book value.