3 Buys, 3 Wins. And This 9.2% Payer Is 11% Off Again.

Michael Foster, Investment Strategist
Updated: October 5, 2026

Our favorite 9.5% dividends are on sale, and very few investors realize it.

It’s a striking situation because a payout that size handily beats a 10-year Treasury. Sure, the 10-year pays about 5% now. And it’ll pay you that for a decade, until you get your principal back.

But that’s still only a bit more than half of what these 9.5% payers—called closed-end funds (CEFs)—pay on average. Plus, unlike a Treasury, we can buy these funds’ portfolios for less than they’re actually worth, putting the potential for big upside on the table, too.

In fact, because so many investors are currently dazzled by those Treasury yields, we have a unique chance to buy our favorite CEFs at an unusually deep 7.8% average discount (more on that in a moment).

Before we get into how we’re going to play this field of nearly 400 funds, I want to put one particular CEF in front of you. It’s jumped back on my radar for plenty of reasons, including:

• A high yield (9.2%).
• Sustainable payouts. (This payout has grown over the last 16 years, with special dividends, too.)
• A deep discount (11.3%).
• Strong performance. (We’re talking 13%+ annualized returns here.)

It’s called the Virtus Equity & Convertible Income Fund (NIE), and we know it well at my CEF Insider service. We’ve held it three different times, and it’s delivered positive returns every time.

The latest? A 58% total return in a little over four years, from March 2022 to May 2026. And we collected the fund’s handsome payout over that entire span.

NIE Pays Nearly Twice What Treasuries Do, Trades for 89 Cents on the Dollar

NIE is a tidy “one-stop shop” for stock and fixed-income exposure. It holds blue-chip stocks like Alphabet (GOOGL), Apple (AAPL), Amazon.com (AMZN), and Caterpillar (CAT). It then adds highly liquid, high-yielding convertible bonds and convertible preferred stocks to boost its income. It caps all that with an option-selling strategy to provide a bit of extra cash.

The result is what you see below: a dividend paying that 9.2% yield and that hasn’t been cut since the 2008/2009 financial crisis.

A Time-Tested 9.2% Payout

In fact, the regular payout has grown since then, with regular special dividends (the spikes you see above). And how’s this for performance?

NIE Triples Investors’ Money (and Then Some)

Over the last 10 years, the fund’s total return, based on its market price, has clocked in at a hefty 13.4% annualized.

That leaves it with an income-and-growth record that’s about as spotless as they come: a 13.4% annualized total return, a 9.2% current yield and a dividend that’s grown over the last 16 years.

With all that in mind, how in the heck is NIE trading at an 11.3% discount? Not only is that markdown deep on its own, it’s below the 9.8% the fund has averaged over the last five years.

I’m going to break that down next, because deals like this exist across CEFs.

Before we get to that, though, I know I’ve been throwing the word “discount” around liberally here, so let’s step back and talk about what it means when applied to CEFs.

A CEF “Quirk” That Delivers 9.5% Dividends, “Stock-Like” Price Gains 

When I say “discount” I mean a discount to net asset value, or NAV. It’s the difference between a CEF’s price on the stock market and the per-share net asset value (NAV) of its portfolio.

Unlike stocks and ETFs, CEFs generally have a fixed number of shares for their entire lives. As a result, CEFs can (and often do) trade at different levels in relation to per-share NAV: premiums when above and discounts when below.

That’s our opportunity: We can buy CEFs when they’re heavily discounted, wait until they aren’t, then sell and roll our money into another discounted fund. And we collect CEFs’ large dividends the entire time.

This is the heart of our strategy at CEF Insider. And as I mentioned, CEFs’ discounts have been getting wider.

You can see this in the chart above, with the average discount recently hitting 7.8%, the widest in over a year. That sudden dip is part of a broader historical story that makes this recent markdown even more compelling.

It also follows a steady recovery that’s been brewing since 2024—a good two years now. During that time, CEF discounts have been recovering from their widest point in late 2023 following the 2022 mess (showing that CEF investors tend to move more slowly than stock buyers).

These discounts were steadily recovering until panic caused them to widen sharply in April 2025 (the “tariff tantrum”), then recover and dip again in March 2026, with the Iran war, only to recover yet again.

Now discounts are widening once more and, like the two dips in the last two years, this is a buying opportunity for us.

NIE Is Just the Start

Which brings me back to NIE, with its 9.2% dividend and 11.3% discount.

It’s natural to wonder if a payout that big is sustainable. The answer is yes, and we can tell that by looking at the fund’s NAV. Over the last decade, the fund has delivered a total NAV return of 13.2%. That’s far ahead of its 9.2% yield, and gives the payout strong support.

This makes NIE particularly attractive at an 11.3% discount. Throw in the overly large discounts on CEFs as a whole, and we get a whole hunting ground of 9%+ payers, too.

Why haven’t other investors caught on to this? They’re entranced by the 10-year Treasury’s 5% yield. We’re going to take advantage of that to grab CEF yields nearly double that—at deep discounts, too.

NIE Is a Great Fund. Here Are 20 More (Yielding 10.5% on Average) 

As I said, we love NIE at CEF Insider. Every time we’ve bought, it’s paid off.

The fund’s big discount has moved it back up my watch list. It’s not in our CEF Insider portfolio yet—but it’s only a nose behind the 20 CEFs that are. I’d like to see the fund’s 11.3% discount hold here for a while longer, or even widen a bit more, before we add it again.

Thursday 8 October

AVI Japan Opportunity Trust PLC ex-dividend date
CT Private Equity Trust PLC ex-dividend date
Finsbury Growth & Income Trust PLC ex-dividend date
Impax Environmental Markets PLC ex-dividend date
Law Debenture Corp PLC ex-dividend date
Merchants Trust PLC ex-dividend date
Mid Wynd International Investment Trust PLC ex-dividend date
Parvus Energy Efficiency Trust PLC ex-dividend date
Real Estate Investors PLC ex-dividend date
Schroder European Real Estate Investment Trust PLC ex-dividend date
Strategic Equity Capital PLC ex-dividend date

In this interview, Stephen Inglis, head of Regional REIT’s asset manager, ESR Europe LSPIM, and de facto CEO of RGL, talks about the recently released H126 interim report, with a focus on the strategic progress made during the period. It continues to be a challenging market environment and while the progress that RGL is making is yet to be reflected in EPRA earnings, asset sales are on track to reach more than £55m for the year, debt is falling, portfolio quality is improving and rent levels are increasing. Stephen says that although lettings are taking longer to negotiate, occupier demand for good quality property is robust and that a growing demand-supply imbalance in the market provides a strong tailwind for continuing rental growth. Meanwhile, the full year DPS target of 8.0p was reconfirmed, leaving the shares on a yield of more than 9% and trading at less than half net asset value.

The first half results are very much about the strategic progress you are making. Can you briefly give the background to that strategy.

Stephen Inglis: The company is invested in the office market, which has struggled a little post-Covid, so in 2024 we set out a recovery plan, in effect, to reduce the indebtedness of the business and improve net income – by selling void properties and/or leasing up some of our asset management initiatives, where we’ve refurbished assets and where demand clearly exists.

What progress have you made on disposals in the first half?

Stephen Inglis: In the period, we’ve disposed of £21.5m of assets, mainly vacant or partially vacant, which has had a net effect of £700,000 of savings from those void costs. That’s in line with our £50m to £60m target for the year-end, and we’re hoping to achieve closer to the higher end of that range. That, in turn, has reduced debt by some £22.4m. If we’re on target for the year-end, we’ll reduce LTV from its current level of 38.5% to c 35% by year-end.

What are your plans for the refinancing due next year?

Stephen Inglis: We have a facility due to be redeemed in December 2027, so there’s still some time to go, but as you’d expect, we’re quite well progressed on replacing that debt. We’re in discussions with our current lender, as well as other parties in the market, and we’re looking to achieve some competitive tension between lenders. So yes, we’re well advanced – we’d anticipate having new debt in place by the end of the first quarter of 2027, well in advance of the December 2027 redemption.

Turning to the other side of the strategy, what kind of portfolio are you building and what are the prospects for it?

Stephen Inglis: The intention is to reduce the number of assets and hold higher-quality assets within the portfolio, and that’s done in a number of ways: selling down non-core, non-performing assets, and investing more money into those assets where we believe there’s a long-term future in terms of occupancy and rental growth. If we look at the letting side, the leasing market has been subdued – by that, I mean lettings are taking far longer to complete than we’ve ever seen before. Typically it’s now nine to 15 months to complete a letting from the initial viewing, versus six to nine months maximum pre-COVID. So it really has moved quite dramatically.

That being said, there are still tenants relocating, and we let 26 spaces over the course of the first period, generating £1.9m of income across those spaces – and that’s 3% ahead of ERV on average. So we’re still seeing that rental growth story, and I think that’s set to continue. Within that, we achieved one significant letting over the period: a business park with two buildings in Sherwood, Nottingham, totalling just over 146,000 square feet, which we leased to Glenair, an American technology company.

That’s quite an interesting story, in that the building had been identified as surplus from our perspective, and we were actually looking to demolish it to make way for a high-quality industrial unit in that location. However, we were approached by this tenant, who simply couldn’t find ready-made space in the marketplace to meet their requirements. They came to us saying: ‘Look, the fundamentals of this building are suitable for us – the quality of the building in terms of the external fabric is good, there’s a great car-parking ratio, and we’d like to occupy it.’

The difficulty for us was that this would have meant a c £5m investment to refurbish the building to make it fit for Glenair’s occupation. However, the tenant turned around and said, ‘Actually, we’ll do the works and spend the £5m ourselves.’ So, from our point of view, it’s a capital-light letting, achieving a rent that grows to £1.1m in 2027 – a very good result.

But that’s what’s happening in the marketplace: we’re seeing a lack of supply of ready-made space, of that there’s no doubt. We’re always speaking with occupiers who are complaining, literally, that they don’t see enough space available for their use, and that will create a bottleneck in the market for better-quality space – which is what we’re trying to provide through our refurbishment programme.

How important is building a higher-quality portfolio to meeting occupier demand and driving rental growth?

Stephen Inglis: Very important – it’s a simple answer. Nearly all of the interest we have, and most of the requirements in the market, are for Grade A accommodation meeting EPC A or B, so tenants have definitely been driven towards higher-quality space. That was happening even before COVID, but its aftermath has probably accelerated it, with tenants looking for better-quality space to attract talent and make spaces more attractive for existing employees. So that’s definitely been a huge trend in the market.

The other reason is that the government still intends to introduce minimum requirements by 2030 of EPC A and B, so tenants, in readiness for that, are now looking at space and saying: ‘If that doesn’t conform to those standards, then we really don’t want it.’ That has been, and continues to be, a trend.

We focus very much on the ESG credentials of the portfolio, with EPC being an important part of that. Over 61% of our portfolio is currently EPC A or B, and a further 25% is C, where we’ve identified the journey to improving those assets to A or B. It’s worth mentioning, in the context of the market, that only around 20% to 25% of the regional office market currently conforms to EPC A or B, and growth in that has been c 8% per annum – so obviously 8% of 25% isn’t going to make much of a dent in that ongoing requirement.

If you look at the supply-demand dynamics, approximately 81.6% of the regional office market is occupied. Of the c 20% that’s currently vacant, most is unrefurbished and not fit for purpose. So even with steady-state demand, rather than increased demand, we’ve clearly got a bottleneck – and that’s really what’s beginning to drive rental growth in the regional markets. I expect that to accelerate the closer we get to 2030.

What rental growth is the market seeing and what have you been achieving on your own lettings?

Stephen Inglis: We’ve seen consistent rental growth above ERV, and ERV themselves are moving – typically 3.7% in 2025, and 5.3% so far in 2026, above ERV. That translates to 6% to 7% annualised growth, and if that continues, the power of compounding should see substantial rental growth. But to put it in context, spaces we were previously letting at £15 to £18 a square foot are now in the region of £24 to £30 a square foot – that’s putting it in real terms.

What should investors expect in terms of earnings and dividends this year, and over the next two or three years?

Stephen Inglis: Consensus forecast has us paying a dividend of 8p per share. We’ve paid 4p so far in the six months, fully covered, and the board’s policy is that we will only pay fully covered dividends – but we wholly anticipate being able to meet our ambition of an 8p dividend by the year-end.

I think the important thing to recognise in the numbers is that we’ve achieved £1.9m of additional rent, plus the savings in void costs that tenants now cover. However, we do still have an issue with breaks and expiries over the period – that was roughly £1.8m, albeit offset by an additional £700,000 of savings from the sales. So we’re definitely going in the right direction: we’re 2.5% up in the period on actual occupancy.

The EPRA numbers distort the real picture, because refurbished assets come back into the EPRA numbers. So, bizarrely and counterintuitively, EPRA occupancy is slightly down, but real occupancy is actually up 2.5% – again, a step in the right direction.

Looking ahead, we talked about supply and demand earlier – you’d anticipate that renewal rates would improve, because we’re continually spending little and often on those buildings to upgrade them so they meet tenant requirements. The supply out there is limited, so there’s less choice for tenants to relocate. Combined with our leasing activity and improved renewal rates, we’d anticipate that our rental income will grow, and our net rental income will also grow, because we’re getting rid of those void costs through sales and leasing.

With a 9% well-covered yield and the shares trading at around 0.5x book value, what do you see as the catalysts to close that gap?

Stephen Inglis: Starting with why we are where we are: the listed real estate market hasn’t been a popular sector, and all the REITs are currently trading at a discount. We’re trading at a bigger discount than most, and that’s down to two things. One, we raised money a couple of years ago, which had an impact on the share price. And two, we’ve been in the worst sector in terms of valuation and perception – obviously the office sector, post-Covid.

I think that’s been oversold. We’re demonstrating now that there’s a supply-demand imbalance coming, and it’s just a case of when it arrives – I think we’re seeing the early stages of it now, and, as I said earlier, it will improve between now and 2030, which should improve our occupancy, our gross income and our net income. So I think all those things are positive.

The negatives, of course – and I’d be churlish not to mention them – are that we do have the refinancing ahead, and that will be at a higher interest rate, given the cheap debt we all locked into many years ago. That will clearly have a negative impact. And, of course, valuation generally has been unpredictable. That said, if you look at the valuation yields across our portfolio over the last three periods, they’re identical, so we’re seeing a flat valuation market, which would tend to suggest we’ve reached the bottom.

But we’ve also got interest rate pressures in terms of what the Bank of England will do, and, of course, a budget looming – prime minister Andy Burnham’s first budget. So there’s still a lot of uncertainty out there, and that uncertainty preys on investors’ minds. I think that’s why we remain at a fairly depressed share price, against what you mentioned earlier, which I’m wholly in agreement with: that the long-term potential of this portfolio is strong.

(Thank the Bond Panic)

Brett Owens, Chief Investment Strategist

We contrarians love it when the crowd mislabels a stock and tosses it overboard. We really love it when this happens to the same stock twice!

Today we’re going to look at a perfect example: an 8.3%-paying closed-end fund (CEF) most people treat as a bond proxy. But it’s much more than that.

That’s strike one for the mainstream crowd. And it’s the first part of our setup here.

Next, when investors aren’t slapping that label on this fund, they’re mistakenly referring to it as a utility fund.

Strike two!

When a situation like this crops up, we essentially get a deal on top of a deal. In this case, the result is a chance to buy a “beautifully boring” 8.3% dividend (paid monthly, no less) for 95 cents on the dollar.

Source: Income Calendar

The ticker in the chart above gives it away: The CEF in question is the Cohen & Steers Infrastructure Fund (UTF).

Bond Fund? Nope. Utility Fund? Not Exactly

To be fair, UTF does hold some bonds (about 15% of the portfolio). And utilities are about 32% of the fund.

We’re more than okay with that. The bond panic is putting this part of UTF’s portfolio on sale. And the crowd’s tendency to view utilities as simply the stock version of bonds is pulling them down, too.

You can clearly see that in UTF’s discount to net asset value (NAV, or the value of its underlying portfolio), which has plunged to 5% from around 1% in late summer, when bond-market worries really kicked up:

UTF Gets Sucked Into the Bond-Market Panic  

What are mainstream investors missing here? Put simply: one of the best-built portfolios out there for profiting from the AI boom.

UTF’s management has smartly positioned the fund to profit from AI in four “tiers”—each tied to a critical input. Let’s go through UTF’s top-10 holdings and break them out so you can see what I’m getting at here.

Tier 1: AI Needs Power. UTF’s Holdings Deliver

AI’s thirst for electricity is no secret. The numbers are everywhere. One example: a recent estimate from the International Energy Agency (IEA) forecasting that by 2030—just over three years from now—data-center power use will double from 2025.

Utilities are, of course, the winners here—our “first tier,” in other words. UTF is well-positioned, starting with top holding NextEra Energy (NEE), whose NextEra Energy Resources subsidiary is the world’s biggest provider of power from wind and solar.

Other utility mainstays, like Duke Energy (DUK), Alliant Energy (LNT) and Pennsylvania-based PPL Corp. (PPL), hold spots here, too. As does NiSource (NI), an Indiana-based gas (hold that thought!) and electricity provider.

All are benefiting from AI’s power demand. And all are down this year, due in part to the bond-market crash.

Tier 2: Natural Gas Providers Step In When Renewables Can’t

Then we’ve got our “second-tier” AI beneficiaries, pipeline operators TC Energy Corp. (TRP) and Enbridge Inc. (ENB), the latter of which we covered a couple weeks ago. Both are at the heart of America’s natural-gas system. (ENB transports 20% of the gas used in the US.)

Renewables are growing, but gas still accounted for the largest slice of US electricity generation in 2025 (41%), according to the US Energy Information Administration (EIA), followed by renewables (24.1%), nuclear (17.7%) and coal (16.6%). That makes it essential to AI. ’Nuff said.

Tier 3: AI’s Physical “Skeleton”

The third tier: American Tower (AMT), a cell-tower owner that collects “rents” under long-term contracts. As data demand rises, so does demand for new towers (and space on existing ones). The company also has a hand in data centers through its acquisition of CoreSite in 2021.

AMT’s data-center revenue jumped 13.4% in the second quarter, to $297 million. That was about 11% of the company’s total.

Tier 4: The 19th-Century Network Keeping AI “On the Rails”

Finally, the fourth tier: the two railway holdings in UTF’s top-10, Union Pacific (UNP) and CSX Corp. (CSX), which ship goods for the data-center buildout. Plus, as AI expands, it’ll boost business profits. When that happens, companies do one thing—expand. That puts more cargo in railcars.

Where does all this leave us? With, like I said, the best portfolio for profiting from AI infrastructure there is.

A 54% Winner On Its Way to “Paying Us Back” in Dividends

There’s something else I want to share about UTF before we go further: The fund has been in our Contrarian Income Report portfolio since 2020. In that time, it’s handed us a tidy 54% total return.

And get this: In that time, UTF has “paid back” nearly half of our buy price in dividends.

Here’s how that breaks down: Back in November 2020, we bought UTF for around $24.70 a share. As of this writing, we’ve collected $10.91 a share in dividends, or around 44% of that purchase price.

The longer we hold, the more we get “paid back.” And once we break over that $24.70 mark, everything else—dividends and upside—is gravy!

UTF’s Other Hidden Edge: Smartly Managed Borrowing

One risk that may come to mind with CEFs is leverage. And yes, UTF uses it: As I write this, the fund borrows against 28% of its portfolio—modest by CEF standards.

But management has been smart about its loans, borrowing 43% of its total at fixed rates and 57% in variable (manageable, given the earnings potential of UTF’s holdings). Both rates are low: 4.4% in variable and just 3.1% for fixed, for a total weighted average of 3.8%. Try getting that from your local bank!

UTF’s leverage is another place where the crowd has it wrong (strike three!). They’re ignoring management’s shrewd moves here—which are another reason for us to buy in.

This 12% Payer Is Right Next to UTF (in the Bargain Bin)

UTF isn’t the only big dividend being unfairly tossed aside. The same thing is happening with another fund I’m recommending now.

This one pays even more (a 12% dividend), and it pays monthly, too. What’s more, this already-outsized payout has been growing—up 8% in the last five years, with two special dividends thrown in:

This ignored income play trades at a 5.7% discount now. A markdown like this has only happened a few times in the fund’s lifetime. The last time it happened, in late 2023, it vanished in less than two weeks.

Income for the year to date £10,368

Income fcast to meet the 2031 target.

The only thing in your plan you have any control over are your dividends.

Mr. Market is reliable until he isn’t.

IF the SNOWBALL’S income continues to outperform, with the current high yields available in the market, the income in another 4 years could be over 20k a year, 20% yield on seed capital.

This is a target only, not a fcast.

As prices fall, yields rise.

by Michael Foster, Investment Strategist Let’s go ahead and break down a recent “win” at my CEF Insider service: an unloved fund that handed us a 48% total return in 10 months! Why? Because this call went our way for plenty of reasons – and we can take those reasons and “convert” them to strategies that can give us the kind of portfolio we all want: one that delivers healthy dividend income and strong price upside. The fund in question: the Columbia Seligman Premium Technology Growth Fund (STK), which returned that 48% from our buy call in the November 2025 CEF Insider to our sell in the recently released September issue. Let’s get into it. Step 1: Start With This “CEF-Only” Value Indicator The first thing that made STK jump out to us was the environment in late 2025. AI-bubble fears were rampant. STK is a tech fund, and wow, did those fears register with it. Before I get into how, a quick aside: as we’ve talked about here before, CEFs have a unique measure that tells us when they’re cheap or pricey: the discount to net asset value (NAV). It exists because a CEF generally can’t issue new shares to new investors, so these funds’ share counts stay more or less the same for their entire lives. This means a CEF’s market price can vary from its per-share net asset value (NAV, or the value of its underlying portfolio). This is exactly what happened as 2025 rolled on. As you can see below, STK’s total-return NAV (in purple) began to outpace its total return based on its price on the open market (orange). That was the “tell”: Investors were souring on STK, even as its portfolio performed relatively well. STK’s Portfolio Gains, Investors Start to Wonder … As that happened, STK’s discount broke south, to around 5.5%. This from a fund that was trading at a 5.5% premium to NAV as recently as May 2025: … And Its Widening Discount Grabs Our Attention That’s the first sign that last November was a good time to buy. But as with stocks, a sudden widening discount can be a sign of trouble with CEFs. So we need to take a closer look. Step 2: “Check In” With Management When it comes to management, we have an advantage here at CEF Insider. Since this corner of the market is small (there are only about 400 or so CEFs, divided among a small number of management companies), I’ve talked to many fund-management teams over the years. That includes the team at STK, which has been in place for a long time, so we can safely say this discount did not have anything to do with any major change at the fund’s headquarters. Six portfolio managers work together to run STK. Paul Wick has been there the longest (since 2009). And even the two most recent additions, Vimal Patel and Shekhar Pramanick, have been managers at Columbia Seligman for eight years (since 2018). The takeaway? If you see a discount, pull up the fund’s documents and make sure it’s not because of a recent management shakeup. Or better yet, let me do it for you at CEF Insider! Step 3: Study the “Tale of the Tape” The best measure of management’s talent? The fund’s long-term performance, of course. But we have to make sure we’re looking at the right number here. This comes back to our earlier comparison of NAV versus market-price returns. When evaluating management, NAV matters more, as it’s more influenced by portfolio management and less by investors’ moods. There was no problem there with STK (in purple below) which had easily outrun the NASDAQ in the decade before our buy: STK’s Portfolio Shoots Past the NASDAQ STK pulled this off by selling call options on the NASDAQ (or an ETF equivalent). That’s a relatively low-risk way to generate extra income. Beyond that, STK focuses on tech stocks, from more aggressive plays – such as fuel-cell maker Bloom Energy (BE) – to the more familiar: NVIDIA (NVDA), Alphabet (GOOGL), Apple (AAPL) and Microsoft (MSFT). So up to this point we’ve got a widening discount, a stable management team and a history of beating its benchmark. We also have a pragmatic growth-with-income focus that was overlooked as investors fretted about an AI bubble. Now let’s talk dividends. Step 4: Know Your “True” Dividend Payouts (Free Stock Screeners Are No Help) STK can fool investors who use free screeners like Yahoo! Finance and Google Finance into thinking the fund’s yield is low. That’s because these tools don’t count special dividends, which can make a huge difference with CEFs. That’s certainly the case with STK, which leans heavily on one-time payouts (the spikes below): A Steady Payout – With a Raft of Special Dividends At the time of our buy, for example, you’d think the fund yielded just 5%, going by its “regular” payout. But include special payouts declared for 2025 and you get a far larger number: 8.2%. That’s way more realistic, and something most investors miss. (But something we at CEF Insider meticulously track, thanks to our advanced research tools.) The question then becomes, did STK have the performance to keep those payouts coming? The answer is yes. We can easily check this by looking at the fund’s long-term total-return NAV. STK’s Portfolio Backstops Its Payout (Two Times Over) With an 18.1% annualized total NAV return since inception, STK was more than doubling the 8.2% yield on its market price when we bought, so we knew it could keep its payouts high. Here’s the scorecard to date:Unusual discount? Check.Stable management team? Check.Strong long-term performance? Check.High dividend payout? Check.The portfolio performance to back up that payout? Check.A clean sweep! And our call rewarded us with that 48% total return in just 10 months. Which leads us to our next question: How do you know when to sell and take that return off the table? Step 5: Look to NAV, Discounts and Dividends to “Time” Your Sells Traditionally with CEFs, we use the discount to NAV as our guide: When it widens to an unusual level, we look to buy. Then when the discount narrows, we sell and pocket the profits. That works, for the most part, but like most rules, there are exceptions – and STK is a fascinating one. Let’s start with the discount, which actually widened from around 5.5% just before our buy call to around 7% now, a few days after our sell. Meantime, its total return climbed 48% by market price during our holding period, while its total-return NAV gained 55%: STK’s NAV Outran Its Market Price While We Held That might signal that our buying opportunity was still on the table, especially as nothing else had materially changed with the fund. Well, almost nothing else. When we sold, STK’s yield (including special dividends) had shrunk to 5.1% (and even lower without them). That was mainly driven by the fund’s strong price gains. This is where yield can play a key role as a value measurement. CEFs, of course, are mainly income investments, and a low yield (even one generated by price gains!) can cause buyers to take a pass on an otherwise-strong fund. That, in turn, would take some investors out of the market for STK, and make it harder for the fund to close that 7% discount. In other words, we want strong performance, a wide discount and a high yield to work together to attract more investors to a CEF. If one of those is missing, it’s time to sell.

30 September 2026

Options span bonds, alternative assets, income and more.

By Emmy Hawker

Senior reporter, Trustnet

Interest rates across many developed markets are on the rise as central banks battle to bring inflation under control – with the Federal Reserve and European Central Bank both hiking and the Bank of England expected to follow suit in the coming months.

For investors, the question is how to position their portfolios for a world in which interest rates will remain sticky for the foreseeable.

Those seeking to capture the income benefits of higher rates while limiting sensitivity to further rate moves might wish to consider high yield bonds, which Paul Angell, head of investment research at AJ Bell, described as a compelling middle ground. In this sphere, his selection was the £1.7bn Aegon High Yield Bond fund.

“High yield bonds are typically issued with shorter maturities than their investment grade counterparts, making them less sensitive to interest rate movements and better positioned to adapt to a higher-for-longer rate environment,” Angell said.

Aegon High Yield Bond has been co-managed by Mark Benbow and Thomas Hanson since 2018 and 2019 respectively, meaning they have been at the helm through the pandemic and the subsequent interest rate hiking cycle.

Over one, three and five years to the end of August 2026, the fund has logged top-quartile returns against its peers in the IA Sterling High Yield sector.

Trustnet recently highlighted the popular fund as one of the most consistent in the IA Sterling High Yield sector over the past 10 years, beating the sector average in eight years.

Performance of the fund vs sector over 5yrs

Source: FE Analytics

Along a similar vein, Emma Bird, head of investment trusts research at Winterflood, suggested CVC Income & Growth.

Managed by Pieter Staelens, the investment trust provides investors with access to a diversified portfolio of sub-investment grade debt instruments – primarily of European large-cap issuers, including loans, high yield bonds and structured debt.

The portfolio is typically split between performing credit, consisting of core income investments, and credit opportunities, which includes higher yielding debt with greater potential for capital growth.

“As at 31 July, 77% of the portfolio was invested in floating rate assets, meaning the fund should benefit from a rising or higher-for-longer interest-rate environment, in the form of rising/higher income generation,” Bird said.

The trust is currently trading at a narrow premium to net asset value (NAV) at 1.22%, while its sterling shares offer a yield of 8.2%.

Performance of the trust vs sector over 5yrs

Source: FE Analytics

However, while higher bond yields can offer more attractive income, Dzmitry Lipski, head of funds research at interactive investor, argued that persistent inflation and uncertainty over the path of rates call for bond funds offering flexibility and diversification.

Lipski said: “Unlike traditional bond funds aligned more closely to a particular market or benchmark, strategic bond managers can adjust duration, credit exposure and sector allocation as macro conditions change.”

This means strategic bond managers can favour shorter-duration bonds when interest-rate risk is elevated, capture attractive yields in corporate credit or increase exposure to longer-duration government bonds if growth weakens and interest rates begin to fall.

As such, Lipski suggested the £1.2bn Jupiter Strategic Bond fund, which is co-managed by Ariel Bezalel and Harry Richards.

Given the fund’s ability to alter its interest-rate sensitivity, Lipski said “it could be a flexible core bond allocation for investors comfortable with active manager risk”.

“It can capture income from higher bond yields while giving the managers scope to reposition if the economic or interest-rate environment changes,” he added.

Performance of the fund vs sector over 5yrs

Source: FE Analytics

Beyond fixed income, Lipski also pointed to global equity income strategies. The emphasis on dividend sustainability and pricing power can provide investors with a degree of protection against the corrosive effects of persistent inflation.

“Higher interest rates increase the cost of capital and can place a greater emphasis on companies with strong cashflows, resilient balance sheets, pricing power and sustainable dividends,” he said.

He suggested Fidelity Global Dividend, which was launched in 2012 and is managed by FE fundinfo Alpha Manager Daniel Roberts alongside Tristan Purcell.

“Within portfolios, it could be a core global equity holding with a defensive income discipline, offering participation in long-term equity growth alongside the potential for more resilient income and lower volatility than the broader global equity market,” Lipski added.

The fund returned 61.6% over the five years to the end of August 2026, beating the IA Global Equity Income sector average return of 59.4%.

Performance of the fund vs sector over 5yrs

Source: FE Analytics

Looking beyond traditional asset classes, infrastructure and other alternative assets can also provide inflation protection and diversification in a higher-for-longer environment.

Matt Ennion, head of investment fund research at Quilter Cheviot, highlighted the £2.5bn International Public Partnerships trust. It aims to provide investors with long-term, inflation-linked returns by growing its dividend while also targeting capital appreciation.

Alongside government-backed and regulated assets, where revenues are often contractually linked to inflation, Ennion noted that even within the trust’s corporate investments, “many underlying assets benefit from inflation-linked revenue streams, providing additional resilience”.

Most of the portfolio (72%) is invested in the UK, followed by Belgium, Australia and Germany. It has just 2% invested in the US.

It is in the second quartile for returns in the IT Infrastructure sector over the five years to August 2026 and is in the first quartile over 10 years, up 53.2% over the decade.

The trust is trading at an 8.9% discount to NAV, meaning it “offers investors the opportunity to access a portfolio of high-quality infrastructure assets at an attractive valuation, making it a compelling option in an inflationary backdrop”.

Performance of the trust vs sector over 5yrs

Source: FE Analytics

Should rates stay higher for the foreseeable, then investors may also want to consider funds investing more specifically in companies that benefit operationally from higher rates, such as banks or insurers.

For funds in this category, Angell pointed to Polar Capital Global Insurance, which has £2.3bn in assets under management invested in companies operating within the international insurance sector.

He said: “Higher interest rates are not universally bad news. In fact, they can be highly supportive for insurance companies, which earn investment income on large pools of premiums before claims are paid.”

Rather than relying on traditional economic growth drivers, insurers’ earnings are largely linked to underwriting profitability and investment income.

“Polar Capital Global Insurance is managed by a specialist team with deep industry expertise,” Angell noted. “Within a portfolio, the fund acts as a diversifying global equity holding that can benefit from elevated interest rates whilst offering exposure to a defensive and often overlooked part of the market.”

Performance of the fund vs sector over 5yrs

Source: FE Analytics