The current share price is 95p dividend 6.88p a yield of 7.1%.

IF the price continues up the yield will fall below 7%, so if u are considering adding this to your portfolio, it might be your last chance for a while.

Of course there are no guarantees it will go higher but if not, u have the dividends to re-invest as u wait for the price to rise.

Doceo

For what was behind the February pick-up in year-high discounters, broker Winterflood writes in its monthly summary of the sector: “Investment Trust sector average discount at 29 February was 15.9% vs 14.2% at 31 January, 12.9% at the end of 2023 and 11.3% at the end of 2022. Discount moves remain closely correlated with Gilt yields, with the sector discount widening so far this year coinciding with a rise in yields. The vast majority of sub-sectors were de-rated last month, with still none trading at a premium at the end of February.”

“…discount widening so far this year coinciding with a rise in yields” – could this be the cause of the UK equity income sector’s malaise? After all, yield is a key attraction of the sector – all 10 funds generate yields at or above 3.9%: AEI (8.4%); CTY (5.1%); DIG (4.7%); EDIN (3.9%); LWI (5.4%); MRCH (5.3%); MUT (4.6%); SCF (5.3%); SHRS (6.6%); TMPL (4.0%).

So, when yields on risk-free Gilts rise, those of other asset classes competing for the investor’s pound, such as UK equity income funds, rise too so that they remain attractive. For yields to rise, dividends need to be raised and/or share prices need to fall. And when share prices fall, discounts widen (assuming net assets remain constant). Just as they have been for other interest rate sensitive sectors, such as renewables and property, rising Gilt yields, the source of discount woe for UK equity income funds, it seems.

And because we have a plausible cause of February’s discount widening, it follows we have…

A trigger
…for a future narrowing in discounts in the UK equity income space – falling Gilt yields. The trigger for falling Gilt yields? Confirmation that interest rates are on a downward trajectory would likely help. Sadly, that was something the Chancellor did not say during the Spring Budget. Perhaps that’s it – it was all down to what the Chancellor did not say…

Tip Watch #1: Don’t blindly buy a tracker – this actively managed fund is on the up
So says The Telegraph’s Questor Column. The actively managed fund that’s on the up? Global investment trust Brunner (BUT). Before extolling Brunner’s virtues, the above Questor article covers the stellar rise of passive tracker funds, noting that in the U.S. assets under passive management now exceed the amount managed by active funds thanks to the low fees, diversification benefits and performance record on offer.

Brunner can point to a strong track record of its own, however. Tipped as a Buy by Questor back in April 2017, the trust has since delivered a capital return of 85%, comfortably above the 64% generated by its benchmark, (70% FTSE World ex-UK/30% FTSE All Share). That’s not all. Brunner’s shares currently trade at an 8% discount to the value of its underlying assets. As Questor notes, discounts tend to close over time, offering further potential upside.

And then there’s Brunner’s dividend record. The trust has increased its payout for 52 years in a row and not by a token amount – Brunner’s dividends are up 4,629% over this period, easily above inflation’s 1,588%. Here the investment trust structure has been helpful. Unlike tracker funds, investment trusts can keep up to 15% of the annual income generated from their portfolio holdings in reserve, allowing dividends to be topped up when needed – a rainy day pot of sorts.

All of which leads Questor to conclude: “…while growing demand for passively managed funds is unlikely to cease in the short run, it would be unsurprising for actively managed funds such as Brunner to become more popular in the long run. Its relatively high historical returns, stable income track record and wide discount mean it remains a worthwhile purchase.”

Tip Watch #2: Greencoat UK Wind (UKW)
Tipped in a Midas special. In MIDAS SHARE TIPS SPECIAL: These are British businesses that lead the world, the Mail on Sunday tipster issues a rallying call to investors to Buy British, specifically those companies that are world leaders in their respective fields. Among Midas’ best of British, wind farm specialist Greencoat UK Wind (UKW).

The article highlights how UKW’s share price has been on the slide ever since energy prices turned lower in 2022. Concerns over the Government’s commitment to the UK wind energy industry have not helped either. At least here, the Chancellor’s promise in the recent Spring Budget to pump £800 million into offshore wind appears to have put paid to those worries.

And with the shares trading at a 16% discount to net assets, Midas believes, at 139p a pop, UKW’s shares offer “good value”, particularly as the fund has a “record of generous dividends”. How generous? In UKW’s latest full-year results on 29 February 2024, Chair Lucinda Riches highlighted that “With the final dividend for the year, our investors will have received over £1 billion of dividends since listing (2013)” – that generous.

Weekly 360 – the week’s Investment Trust results
Vietnam Holding gets another five years, Witan predicts a recovery in 2024 and Tufton Oceanic Assets sets course for 2030. Catch up on the week in Investment Trusts with Frank Buhagiar.

By
Frank Buhagiar

Vietnam Holding (VNH) gets another five year

VNH’s interims help explain why shareholders recently voted for the continuation of the fund–performance. According to Chairman Hiroshi Funaki, “several shareholders told us that they were delighted by the Fund’s performance.” Easy to see why – over the last six months NAV per share came in “4.8% higher than the Vietnam All Share Total Return Index (VNASTR). Above all, the Fund has outperformed VNASTR over 1, 3, 5 and 10 years.”

Looking ahead, no sitting on laurels for the investment managers “The Vietnamese stock market is volatile, and so requires active on-the-ground research and interaction capabilities. We do not take our outperformance to the market and our peers for granted”.

Winterflood “Overweight in Telecommunications contributed to returns. Elsewhere, Bank holdings (largest sector, although underweight to index) fell -3.6%.”

Witan (WTAN) is staying watchful

WTAN’s 12.7% NAV Total Return for the year, a little short of the benchmark’s 14.7% but, as Chairman Andrew Ross explains, “our core managers in aggregate outperformed. Our lagging of the benchmark was entirely attributed to weakness from the GMO Climate Change Investment Fund and Witan’s holdings in investment companies. We see prospects for both to recover in 2024.” As for the sprinkling of magic during the year, CEO Andrew Bell reveals “The magic ingredient for equity markets was excitement over the prospects for companies directly exposed to the accelerating development of generative AI.”

Bell also provides a weather forecast “The fact that the days lengthen from December to June does not guarantee trouble-free weather on the way. Consequently, alongside a generally positive view of the world’s medium-term prospects, a heavy dose of watchfulness is warranted.”

Numis: “The big news from Witan’s announcements this morning is the pending retirement of Andrew Bell, which has resulted in the Board considering management arrangements for the fund.”

JPMorgan sees “no reason to change our Neutral recommendation at this stage”.

Tufton Oceanic Assets (SHIP) sets course for 2030

SHIP’s NAV Total Return for the half year may have come in at 9.6% but the share price moved in the opposite direction from US$0.99 to US$0.98. Okay, only the smallest of losses, but, as Chairman Rob King writes, SHIP was not alone “In common with most of the UK-listed investment funds sector, the Company’s shares traded at a significant discount, on average at 31% discount to NAV over the financial period.”

That discount has been exercising the mind of the Board. King adds “Considering the ongoing share price discount to NAV and the Company’s forthcoming continuation vote at the AGM in October 2024, the Board conducted a mid-term strategy and capital allocation policy review.” The result? “ (the board) believe the correct strategy for SHIP over the medium term, through to 2030, is to continue investing in fuel-efficient second-hand vessels to maximise shareholder returns, intending to realise the Company’s portfolio of assets starting from 2028, well before the decarbonisation of shipping accelerates.”

Liberum: “SHIP’s annualised NAV TR of 13.2% since inception in 2018. On a five-year view, returns rank seventh across all alternative funds with market caps above £100m”.

Numis: “The fund has proved itself to have a nimble management team who are able to navigate changing markets.”

JPMorgan US Smaller Companies (JUSC) believes history is on its side

JUSC’s small cap focus meant performance struggled to match that of the large caps. According to the investment managers “The S&P 500 rose 26% (in USD terms) during the year, led by a handful of mega-cap tech stocks, the so-called ‘Magnificent 7’.” The small cap index, the Russell 2000 Index (Net), could ‘only’ manage a 10.1% gain (in GBP terms). JUSC’s NAV increased by 4.6% (sterling).

The investment managers do not sound overly concerned “the third quarter earnings of our portfolio companies exceeded expectations.” What’s more, the managers believe history is on their side “As 2024 unfolds, we are constructive on the outlook for small-cap companies, given a compelling valuation case and potential for small caps to benefit as they have historically after similar periods of large cap concentration.”

Numis: “We believe that the fund has gained recognition in the market as a consistently strong performer. The shares currently trade on c.9% discount to NAV, which offers an attractive entry point, in our view”.

European Assets’ (EAT) full-year performance – a mixed bag

EAT reported an 8.2% NAV total return (sterling) for the year, a little short of the benchmark’s 9.8% return, prompting Chairman Jack Perry to write “the portfolio performance for the year was on one hand satisfactory, in that it compared well with the peer group and allowed us to announce an increase in dividend, but also disappointing in that it lagged the Benchmark.” As for what lay behind the shortfall “European market leadership came from value stocks, providing a headwind for our growth biased portfolio. Smaller companies also struggled”.

The investment managers however “think this is an excellent opportunity for the creation of long-term returns. We expect to use any further volatility to take advantage of this opportunity and gear the portfolio further.”

Numis: “The key news from European Assets’ results is tweaks to the investment process. The fundamental approach remains the same, with the fund investing in ‘quality growth’ companies, although greater focus will be spent on ensuring that if companies are more expensive than the market, that this is justified.”

Fidelity European’s (FEV) long-term track record remains intact

FEV’s 17.5% NAV total return was comfortably ahead of the benchmark’s +15.7%. Chairman Vivian Bazalgette points out the strong performance was no one-off “The longer-term performance record is also strong, with NAV and share price total returns ahead of the Benchmark Index over three, five and ten years to the end of December 2023.”

As for the outlook, a word of advice from Bazalgette “it would be unwise to buy too fully into the idea that ‘normalising’ interest and inflation rates will ensure a rosy picture in 2024.” With that in mind, “The Portfolio Managers’ focus is unchanged and continues to be on finding attractively valued companies with good prospects for cash generation and dividend growth over the longer term, with positioning driven by opportunities at the individual stock level rather than macro developments.”

JPMorgan: “This was another period of strong performance from FEV, which has been fairly consistently outperforming its benchmark and peers, including on a risk-adjusted basis.”

Literacy Capital (BOOK) helping disadvantaged children

BOOK’s net assets stood at £300.3m as at 31 December 2023, a 19% increase on the previous year after costs, expenses and charitable donations. Charitable donations? As well as generating returns for investors through its private equity portfolio, BOOK also helps “disadvantaged children across the UK get a fair chance” – in 2023, the fund gave £2.8m of charitable donations (£2.3m in 2022), bringing total donations to above £8.5m since the fund’s inception.

On performance, CEO Richard Pindar has this to say “Following extremely strong performance years in 2021 and 2022 (NAV growth of +94.1% and +51.7% respectively), it has been challenging to repeat this level of performance in 2023 (+19.0%), as weaker UK macroeconomic conditions have impacted the growth of certain portfolio companies.”

Liberum: “The 19% NAV return in 2023 is the highest in the sector (ex-3i) and the 3-year NAV return of 217.7% even blows 3i out of the water (140%).”

Winterflood thinks the results highlight the “benefits of its differentiated approach within the peer group, whereby a concentrated portfolio of reasonably small, founder-led companies has been curated through opportunistic partnerships (e.g. retiring founders).”

JPMorgan Claverhouse (JCH) keeping up with the benchmark

JCH posted a 7.3% NAV return for the full-year. Okay a little off the benchmark’s 7.9% but, as Chairman David Fletcher, explains “a favourable environment, together with the changes that the Portfolio Managers made to the portfolio in the first half of the Company’s financial year, in particular its cyclical investments, contributed to an out-performance against the Benchmark in the second half of the year”.

In their outlook, the investment managers talk barbells “your Company remains a modestly-geared portfolio that uses a barbell approach of owning both attractively valued, high-yielding stocks, as well as growth stocks. Our barbell approach is naturally diversifying, and our portfolio is currently focused on robust, liquid, globally-diversified blue-chip, UK listed stocks.”

Numis “JPMorgan Claverhouse remains one of our favoured picks in the UK Equity Income Sector. It has outperformed the FTSE All Share by 1.0% pa following the shift to a more fundamentally driven, higher conviction approach in 2012, producing NAV total returns of 136% (7.4% pa) compared with 113% (6.4% pa) for the index.”

Baillie Gifford Japan (BGFD) sticking to its guns

BGFD clocked a +7.8% NAV total return for the latest half-year period. That compares to the TOPIX’s +13.1% (sterling). According to the Interim Management Report, the shortfall is down to large caps outperforming the medium/small caps, an area which BGFD is naturally drawn to “We are looking for companies with the ability to grow sales and profits significantly over the long term which means that we are naturally orientated towards a higher weighting in medium and smaller companies.”

And the fund managers are sticking to their guns “We continue to be positive about the outlook for the portfolio of stocks held by your Company. Whilst these types of businesses have not been the short-term focus of the market, many continue to make solid operational progress and benefit from longer-term secular trends such as the moves towards digitalisation, automation and AI.”

Winterflood notes that “Share price TR +2.5% as discount widened from 6.7% to 11.5%” while “23.1m shares (3.5% of share capital) bought back over HY.”

The Motley Fool

A £1,000 passive income just from buying shares? Yes, it’s possible!

Story by Christopher Ruane

Different passive income ideas have their own pros and cons. Take buying shares as an example. It is an idea that gets bandied around a fair bit – and some people have built huge passive incomes doing it. Indeed, some leading billionaires generate a sizeable part of their income from shares.

But share prices can fall, meaning that overall one makes a loss even after considering the dividend income. Dividends are never guaranteed. On top of that, it takes money to make money – buying shares is not free, after all.

Here are some of the things I like and dislike about owning shares as a way to earn passive income.

Capital requirement
First, the need for money. Very few passive income ideas require zero cash at all. But some are more capital-intensive than others.
Imagine I want to make a £1,000 passive income annually and invest in shares with an average dividend yield of 7%. To hit my target, I would need to invest around £14,300.

But there are caveats that could help me hit my target at some point even if I did not have that sort of money to invest upfront.

I could drip feed money into a share-dealing account or Stocks and Shares ISA over time. So while I may not hit my £1,000 passive income target in year one, I could achieve it down the line.

Another option is I could start to earn dividends on my dividends. This is known as compounding and is a well-known approach of billionaire investors such as Warren Buffett. He compares it to pushing a snowball downhill so the snow starts to pick up snow, increasing the size.

As an example, if I invested only £5,000 now and compounded the 7% dividends annually, after 16 years I ought to be earning £1,000 each year in passive income.

Finding income shares to buy
What about one of the other challenges? Finding shares that will hopefully not lose value and also generate dividends?

The short answer is, there are no guarantees in the stock market.

Even a great company can run into unforeseeable difficulties. That is why seasoned investors like Buffett spread their portfolios over a range of different shares – and I would do the same, even with a modest amount to invest.

There will be 2k for re-investment at the start of next month.

With reference to an earlier post I will most probably open a new position, possibly Life Science Reit yielding 9%.

The portfolio currently includes charges for trading of £15 for purchases and £10 for sales. AJ Bell are reducing their trading charge to £5, so the new portfolio charges will be £10 for a buy and £5 for a sell.

Many a mickle makes a muckle.

Out of adversity comes opportunity.

Triple Point Energy Transition plc

(“TENT” or the “Company”)

Result of General Meeting

Triple Point Energy Transition plc (ticker: TENT), is pleased to announce that at the Company’s General Meeting held on 22 March 2024, all resolutions were voted on by way of a poll and were passed by shareholders.