INVESTING EXPLAINED: What you need to know about KIDs – Key Information Documents

Story by City & Finance Reporter

In this series, we bust the jargon and explain a popular investing term or theme. Here it’s KIDs.

What are these?
Nothing to do with children, or goats as you suspected. KID stands for Key Information Document – a summary of the facts and figures you need to know before choosing a fund.

This information, compiled by the fund manager, includes the fund’s objectives, its risk and reward profile, the charges and performance data.

Looking up: KIDs are a summary of the facts and figures you need to know before choosing a fund

The document is a requirement of the PRIIPs – packaged retail and insurance-based investment products regulations – an EU-wide safety standard for investors.

The KID is a shorter, simplified version of the document that it has largely replaced, known as the KIID – Key Investor Information Document.

This is a requirement of another EU-wide set of rules UCITS – Undertakings for Collective Investment in Transferable Securities Directive.

Both sets of EU regulations were ‘on-shored’ by the UK post-Brexit.

Collective investment is a fancy name for any type of fund, including investment trusts and ETFs – exchange traded funds.

Why am I reading about this now?
The methods used to calculate some of the other numbers in the KID, such as the charges, have become the source of controversy.

There is a particular row over the forward-looking performance figures in the document which are widely considered to be misleading.

Investment trust managers argue that KIDs – which are supposed to ensure that consumers make an informed decision – are doing the exact opposite.

The trade body Association of Investment Trusts (AIC) says that ‘too many KIDs overstate potential performance – and understate risks which can mislead consumers about the returns that they could receive’.

The AIC also takes issue with the cost disclosure rules, although the watchdog Financial Conduct Authority (FCA), which says that the current system is ‘not supporting good customer outcomes’ has made some concessions on this front.

Is this going to get sorted out?
As part of the wide-ranging Edinburgh reforms to financial services, the Government has pledged to establish a new disclosure regime to replace PRIIPs and UCITs.

To date, however, the House of Commons committee overseeing the reforms says the big promises are yet to be fulfilled. This adds to the pressure for action this year.

In the meantime, where can I go for information that’s more reliable?
While waiting for the replacement to the KID, it is always worth checking whether any funds you have appear on the recommended lists prepared by AJ Bell, Bestinvest, Fidelity, FundCalibre, Hargreaves Lansdown and Interactive Investor.

Bestinvest’s Dog Fund ratings are a guide to the funds that are not delivering, whatever their KID may say.

Despite the fuss, I’m still interested in looking at the KIDs for my Isa funds…
You should be able to find a fund’s KID on the website of the manager, and also on the funds sections of platforms like Interactive Investor and AJ Bell.

KIDs are not the most exciting read. But, setting aside their shortcomings, you may find out some stuff you did not know – and probably should have.

Thursday 2 May

Atrato Onsite Energy PLC ex-dividend payment date
Blackstone Loan Financing Ltd ex-dividend payment date
CQS New City High Yield Fund Ltd ex-dividend payment date
Dunedin Income Growth Investment Trust PLC ex-dividend payment date
Edinburgh Investment Trust PLC ex-dividend payment date
Global Opportunities Trust PLC ex-dividend payment date
M&G Credit Income Investment Trust PLC ex-dividend payment date

The Motley Fool

I’d use these methods for targeting a lifetime of passive income.

Story by Charlie Keough

It’s no secret that inflation has wreaked havoc on markets in the past months. And with that, it’s no surprise that many investors are focusing on generating passive income.

Investing in companies with high dividend yields is a great way to put money to work as opposed to it stagnating.

However, it’s smart to have a strategy before targeting passive income. And there are plenty of considerations that must be taken into account to ensure a greater potential for success.

Let’s explore these further.

The strategy
The first consideration is my timeframe for investing. Often we see the promotion of investing is to ‘get rich quick’. But as a Fool, I much prefer to view my investments over a long-term horizon.

As billionaire investor Warren Buffett famously said: “If you don’t feel comfortable owning a stock for 10 years, you shouldn’t own it for 10 minutes”. And more often than not, the stock market has proven that investing with a long-term outlook is the best way to extract the benefits.
Granted, investors may find it difficult to remain persistent when they see the value of their investments falling. But by viewing them over a timeframe of five to 10 years minimum, short-term volatility is ironed out.

Secondly, I must also consider methods I can use to boost my profits. This predominantly exists in the form of reinvesting my dividends. By doing this, I can benefit from compounding which, over time, will allow my pot to continue to grow at a greater pace.

On top of this, I can also generate greater returns by consistently adding to the size of my investment.

£500 invested in a stock generating 7% growth a year (which, of course, I may not achieve) with a 6% yield would leave me sat with £24,000 after 30 years. However, if I topped this up with a monthly payment of £30, over the same period, my pot could be worth over £150,000.

Finally, I’d diversify my investments. By doing this, I’d reduce my reliance on one company or industry.

Putting this into practice
So if that’s the strategy, how do I implement it? Well, I think the FTSE 100 is a great place to start.

The index is home to a variety of quality companies with growth potential that also offer high dividend yields.

There are over 15 companies that offer yields of 6% or more, spread across industries such as investments, tobacco, housebuilding and insurance. This includes firms such as Rio Tinto (8%), British American Tobacco (9%) and Legal & General (8.5%). And its quality companies with long-term growth potential that I’d target.
More widely, I’d also look at companies that offer yields above the index’s average of 4%. Here, I like the look of HSBC and Lloyds.

Of course, there are risks. Firstly, I wouldn’t buy a stock solely due to its dividend yield. And greater research would have to be done to convince me it has the long-term growth potential I’m seeking.

Additionally, the risk with targeting dividend stocks is that payments can be reduced, or cut altogether, as seen on multiple occasions. I must be aware of this.

However, by employing this strategy to the correct companies, I’m confident I could build wealth.

BWRM will be leaving the watch list because as the price rises the yield falls and now only yields 5.8%. If u have pair traded it with another high yielder, u could book some profit and run the balance.

The worst thing that can happen ‘if u take profit’ is the price continues to rise and u have to take more profit. U could re-invest the profit into another high yielder to grow the Snowball.

Different strokes for different folks.

There’s a ton of information on the net and it can get confusing when they all say something different.

The blog is only interested if the next dividend is going to be paid, better if it gently increases but that’s always the first thing I check when an update is issued.

KISS

I’ve bought for the portfolio 13291 shares in GCP Infrastructure for 10k.

The intention is to collect the dividend and then re-assess.

SUPERMARKET INCOME REIT PLC

(the “Company”)

ACQUISITION OF A CARREFOUR SUPERMARKET PORTFOLIO IN FRANCE

Supermarket Income REIT plc (LSE: SUPR), the real estate investment trust providing secure, inflation-linked, long income from grocery property, announces the acquisition of a portfolio of Carrefour supermarkets in France through a sale and leaseback transaction (“SLB”), for a total purchase price of €75.3 million (excluding acquisition costs), reflecting a net initial yield of 6.3%.

The SLB portfolio acquisition is in accordance with the Company’s investment policy and comprises 17 strong performing omnichannel supermarkets, which are geographically diversified, with a weighting towards northern France, and operated under the Carrefour Market brand. The stores have an average gross internal area of c.40,000 sq ft, with a long history of successful trading and form a key part of Carrefour’s “Drive” online grocery fulfilment network within their respective catchments.

The SLB portfolio has been acquired with a weighted average lease term of 12 years (with a tenant-only break option in year 10) with annual uncapped inflation-linked rent reviews. Carrefour is one of the largest grocers in the world, achieving total sales of €94 billion in FY23. Carrefour operates across 30 countries, is the second largest grocer in France with a 20% market share and has a Baa1 credit rating from Moody’s.

Financing Update

To fund the acquisition, the Company has drawn €81.7 million from its existing HSBC revolving credit facility having also increased the total size of the facility by £25 million. The cost of this new Euro denominated borrowing is 1.70% over EURIBOR, with the acquisition providing an attractive earnings spread over the long-term cost of the Euro denominated borrowings. The Company’s pro-forma net LTV following the acquisition is 37%.

Ben Green, Director of Atrato Capital Limited, the Investment Adviser to Supermarket Income REIT plc, said: 

“We are delighted to have completed this strategic sale and lease back transaction with Carrefour, one of the largest grocers in the world. The transaction represents the Company’s first investment in the €284 billion French grocery real estate market.

This accretive transaction is complementary to our existing portfolio, providing further tenant diversification and continues our strategy of investing in the future model of grocery.”

Details of the 17 stores acquired in this transaction can be found on the Company’s website: https://supermarketincomereit.com/our-portfolio/.

The Company was advised by Rothschilds & Co, Simmons & Simmons and Wargny Katz.

This ship sailed at the end of last year plus the 4.61p dividend.

Current yield 3.11% should revert to 4% at the end of the year, maybe one for your watchlist if there is a Santa Rally this year.