Best and worst performing London-listed funds in April – QuotedData
(Alliance News) – China- and commodity-focused investment funds were among the star performers in April, according to the monthly winners and losers list from QuotedData, published on Wednesday.
A surging gold price last month helped Golden Prospect Precious Metals Ltd shine brightest, while Chelverton UK Dividend Trust PLC also impressed, shaking off a hot UK inflation reading. The investor backs “mid to small-cap companies exclusively outside the FTSE 100”.
Data from the Office for National Statistics last month had shown that consumer price inflation ebbed to 3.2% in March, from 3.4% in February. This was more inflation than the 3.1% expected, however.
“It was somewhat surprising to see the rate sensitive UK Smaller Companies sector rally on the back of April’s inflation data, which came in slightly hotter than expected, although dovish commentary from the Bank of England helped boost sentiment. Importantly, inflation continues to trend downward toward the 2% target,” QuotedData said.
“Chinese shares lead the list of best performers in April, although they remain deeply depressed with the world’s second largest economy still struggling with a range of long-standing structural issues.”
Hipgnosis Songs Fund, which has had a tumultuous time of late, saw a share price surge on takeover interest. Last month, the music royalty investment company agreed to a USD1.40 billion cash takeover from Alchemy Copyrights, which trades as Concord. Later in April, it backed a rival bid from Blackstone Inc worth USD1.50 billion.
The saga did not end there. Concord then upped its bid to USD1.51 billion, before the bidding war reached a crescendo, with Blackstone offering USD1.57 billion. Concord decided against sweetening its bid and said earlier this month that its offer was final.
The following were the best and worst performing London-listed investment companies in April, excluding trusts with market capitalisations below GBP15 million:
Five best performing funds in NAV terms with % change:
Golden Prospect Precious Metals 15.4
Rockwood Strategic PLC 12.8
JPMorgan China Growth & Income PLC 10.5
abrdn New India Investment Trust PLC 8.7
Chelverton UK Dividend Trust 8.5
Five worst performing funds in NAV terms with % change:
Bellevue Healthcare Trust PLC (9.7)
Baillie Gifford Shin Nippon PLC (8.5)
International Biotechnology Trust PLC (7.9)
Vietnam Enterprise Investments Ltd (7.4)
Martin Currie Global Portfolio Trust PLC (6.8)
Five best performing funds in price terms with % change:
Hipgnosis Songs Fund 50.7
Gresham House Energy Storage Fund PLC 36.4
Macau Property Opportunities Fund Ltd 32.1
Seraphim Space Investment Trust PLC 23.2
EPE Special Opportunities Ltd 19.3
Five worst performing funds in price terms with % change:
Asian Energy Impact Trust PLC (15.9)
Schroder British Opportunities Trust PLC (10.7)
Bellevue Healthcare Trust (9.3)
Gulf Investment Fund PLC (8.9)
Custodian Property Income REIT PLC (8.8)
Source: QuotedData. Full details at http://www.quoteddata.com
Despite receiving zero passive income, I reckon these are the happiest shareholders on earth.
Story by James Beard
Receiving passive income makes me happy. Getting money for doing nothing lets me buy more shares, hopefully increasing the level of dividends I receive the next time a payout’s due.
The Oracle of Omaha
But there’s a group of people I believe are happier than both me and the Finns. They’re shareholders in Berkshire Hathaway, billionaire investor Warren Buffett’s investment company.
Between 1964 and 2023, the company’s share price grew by 4,384,748%. During the same period, the S&P 500 increased by ‘only’ 31,223%.
And as usual, during the first week of May, it held its annual meeting in Omaha. With shuttle buses organised from local hotels, a $6 BBQ Meal Deal and the opportunity to buy exclusive rings, watches and fine gifts, I reckon there was a holiday-like atmosphere about the place.
And it’s no wonder. With one ‘A’ share costing over $600,000, the ‘typical’ shareholder is probably wealthier than most Americans.
And yet the company’s never paid a dividend.
That’s why I reckon they are such a happy bunch, particularly those from Finland!
By contrast, my portfolio’s stuffed with high-yielding shares generating good levels of passive income. And most of them are members of the FTSE 100.
My current favourite is Legal & General (LSE:LGEN).
Personal experience
Based on its 2023 dividend, it’s currently yielding 8.1%. And as the chart below shows, it has a long track record of steadily increasing its return to shareholders.
Of course, dividends are never guaranteed. But I’m hoping for future increases as the company has ambitious growth plans.
Legal & General also has a strong balance sheet. At 31 December 2023, its Solvency II ratio was 224%. This needs to be above 100% to meet its regulatory requirements.
However, its 2023 results were disappointing. They were lower than analysts’ consensus forecasts. And its investment management division saw a £154m (11.7%) fall in the average value of assets under management during the year.
Also, the business as a whole is sensitive to the wider economy. Any sign that growth is stuttering, particularly in the UK and US, and investors are likely to become nervous.
But I’m encouraged by the company’s plans to acquire £8bn-£10bn of new pension schemes each year. And if Legal & General continues to grow its dividend — and I receive the levels of passive income I’m expecting — I’ll be a happy man.
The post Despite receiving zero passive income, I reckon these are the happiest shareholders on earth! appeared first on The Motley Fool UK.
Anyone who bought in 2020 and never had a stop loss or stop gain policy would be nursing a sizeable loss today.
But anyone who had a stop loss or stop gain policy and bought recently would be in profit by around 20% plus.
If u don’t have a very strong stop loss or stop gain policy it may be best to stick to dividend shares and compound the dividends. The choice my friend is yours.
But becoming one does not just happen overnight – it takes time and patience.
The level of contributions, as well as the investments you decide to place inside an Isa and how they perform, are the main drivers that will determine whether you can one day reach the £1m savings milestone.
Here, Telegraph Money explains how you can do it.
Work out the returns you must achieve
To get to a million pounds, investors will need to max out their Isa each year and for investments to provide a certain level of returns.
Someone who put the full allowance in their Isa each year since their launch in 1999 and who earned a steady 5pc return a year would have built up a pot of just over £484,000 – not even halfway to reaching the £1m mark.
To reach £1m an investor would have needed to have invested the full Isa allowance each year and to have earned 11pc each year since.
If you include going all the way back to Peps – the precursor to Isas – you would have needed annual returns of 6.5pc.
Investing over the long term has paid off for many who started when Peps were introduced in 1986. The age of customers who have grown their Isa pots to £1m plus is around 73, according to data from stock brokers.
At brokers AJ Bell, the youngest Isa millionaire is just 35.
The investments millionaires have used
Listed investment funds have powered Isa millionaire portfolios at Interactive Investor, and account for the largest share of Isa portfolios: 42.5pc compared to just 8.2pc for unlisted funds.
Alliance Trust and Scottish Mortgage are two of the most common investment trust stocks found in the average Isa millionaire top 10 holdings.
They can borrow money to invest extra than that provided by their investors to boost performance in an upturn. Many also have great track records for paying dividends. The downside is theycan be expensive to trade, with many brokers charging flat fees for the purchase of shares, while units in unlisted funds can be purchased for a negligible fee.
Many investors have had success from unlisted funds, however. Popular funds among Isa millionaires include Rathbone Global Opportunities, Lindsell Train Global Equity, Fundsmith Equity and Fidelity Special Situations. They have also cashed in on rising share prices and dividends from individual stocks.
FTSE blue chips are widely held in Isa millionaire accounts. They include Shell and BP; Lloyds Banking Group and Aviva; Diageo and Rio Tinto.
“Isa millionaires only have an average of 5pc cash in their portfolios compared to 10pc across all Isa accounts, so they are putting more of their money to work,” says Dzmitry Lipski, head of funds research at Interactive Investor. “Long term this can help avoid cash drag,” he adds.
The fastest way to get to £1m
To get to £1m as quickly as possible, the first step is to invest the maximum each year.
It is arguably easier to become an Isa millionaire today, with a £20,000 a year allowance for savers (assuming you can afford to put away the maximum), compared to older investors who started out when Isas launched in 1999 with a £7,000 limit.
If you started saving today and the Isa limit remained at £20,000, it would take you 25 years to become an Isa millionaire, assuming an average annual return of 5pc.
The next key part of your strategy could be to invest early in the tax year. It means you will have up to an additional year in the market, which will also help power portfolios in a rising market, as more of your assets are invested for longer.
When it comes to selecting investments you’ll need a diverse, balanced mix according to your risk appetite. However, you may wish to consider listed funds which have been a good bet for many over the years.
A total of 28 investment companies would have made investors more than £1m if they had invested the full annual Isa allowance in the same company each year, according to research from the Association of Investment Companies, a trade body.
Investing the full Isa allowance each year from 1999 to 2023 – a total of £286,560 – and reinvesting the dividends into one of the five investment companies below would have generated a tax-free pot of over £1.4 million at the end of February.
These top five performing funds are: HgCapital, Pacific Horizon, Scottish Mortgage, Allianz Technology and abrdn Asia Focus. Among the common investment themes in these listed funds are technology and smaller companies.
While these figures are compelling, it is not advised to have all your money in one investment or one investment type.
The average Isa millionaire portfolio includes 28 holdings, according to AJ Bell.
Laura Suter, head of personal finance at the firm, says: “Focus on steady climbers that will gradually increase your wealth over time, rather than putting all your money in higher risk investments that could drop significantly, or at least give you a much more hair-raising ride on the way.
“Make sure you’re sticking to a risk level you’re comfortable with and that your portfolio is well diversified. Betting on a few stocks rising in value could be a recipe for disaster if the sector nosedives or the company hits some trouble.
“Lots of those who make it to millionaire status will invest directly in stocks, rather than entirely in funds. But you should only take this route if you know that you have the time and inclination to research and monitor the stocks regularly.”
Experts insist that getting rich slowly is a smart strategy.
Sarah Coles, head of personal finance at Hargreaves Lansdown, says: “Isa investors don’t take enormous risks.
“Their focus is to consistently invest as much as possible of their annual allowance, as early as possible in the tax year, in a diverse and balanced portfolio. And they’ve done this every year for decades.”
Why long-term investing works
Investing over a long period is a tried and tested strategy.
The sooner you start saving the more you can put aside, and early contributions are the most valuable because they have the longest to grow.
Compounding will also boost returns. In simple terms, your money earns a return in the first year and both the original cash and the return benefit from any growth in the second year. In the third year your investment is further enhanced by any returns achieved. This snowball effect is known as compounding.
Even when starting with zero savings, investing a modest sum of cash each day can potentially unlock a substantial passive income in the long run. Putting aside as little as £7 a day can be transformative to an investor’s wealth given sufficient time. Here’s how.
Saving little and often
Investing this money into top-notch dividend shares could instantly start generating a passive income overnight. But how much can investors realistically expect? This ultimately depends on the yield they manage to secure.
For index investors focusing on the FTSE 100, the average dividend payout by the UK’s flagship index is around 4%. Therefore, every £200 investment is roughly equal to an extra £8 in annual passive income. Of course, for stock pickers, this figure can be bolstered by being more selective. Building a portfolio yielding closer to 6% pushes this income to £12 – a 50% increase.
After a year of investing £200 a month at this rate, the income from a brand-new portfolio would be £144. Obviously, that’s not life-changing. But given time to compound, this can start to add up. After a decade, the income stream would grow to just under £2,000 – and even that might be conservative since it doesn’t include the extra returns generated from capital gains or future dividend hikes.
Of course, share prices don’t always go up. And a poorly constructed portfolio can easily end up backfiring. So, how can investors find the best income stocks to buy?
Picking the right shares
Stock picking is a complex process with countless aspects that investors have to consider. However, there are a few known shortcuts, especially for dividend shares. When hunting for companies that can systematically increase their shareholder payouts, investors could spend time analysing free cash flow, or they could just jump straight to the list of dividend aristocrats .
Does that make it the perfect solution for building a passive income? Not necessarily.
As with any investment, proper due diligence is required. And while it’s true that National Grid has raised dividends for more than a quarter of a century, the average annual growth rate has only been a modest 3.4%. Even in a normalised inflationary environment, the level of wealth created in real terms is pretty minimal. In other words, while the dividends may be “safe”, they may be a poor fit for an individual looking to build wealth.
However, that’s not always the case. Several Dividend Aristocrats have been growing payouts at a far more meaningful pace, some even in double-digit territory. And these could be the key to turning a £7 daily investment into a five-figure passive income for life.
City of London Investment Trust currently pays a yield of 4.85%, so is not in the current blog portfolio. If anyone wants to receive a ‘secure’ dividend it could be paired with a higher yielder to provide a higher level of security and retain a blended yield of 7%. CTY should be in your watch list for when the next market crash occurs.
CTY has an unmatched record of delivering consecutive years of dividend growth, now having reached 57 years. This is the longest continuous period of any investment trust and means CTY is top of the AIC’s ‘Dividend Heroes’ list. This is not to say that underlying earnings have increased each and every year.
Investment trusts have the ability to retain up to 15% of each year’s income in reserve and use this reserve in future years to smooth dividends if revenues subsequently fall. One such year was 2020, with many portfolio holdings cutting or passing on dividend payments in the face of the economic shock brought on by the COVID-19 pandemic. CTY was able to continue to pay an ever-increased level of dividends through the crisis, allowing earnings to catch back up again with the dividend by 2022 when the dividend was once again covered. CTY’s dividend was marginally covered in 2023. Total revenues over the first half of the current financial year, which ends in June 2024 were up, but earnings per share only increased marginally thanks to the short-term dilutive effect of share issuance so far this year. We understand that income generation is in any event biased towards the second half of CTY’s financial year, when many of the big income stocks pay their final dividends. The board has stated that it is confident that it will be able to continue to increase the annual dividend this year.
8% dividend yield Buying these UK dividend shares could provide a £1,600 second income.
The dividend yields on these UK shares soar above the FTSE 100 and FTSE 250 averages. Here’s why Royston Wild thinks they’re worth a close look.
Image source: Getty Images
When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.
Investing in FTSE 100 and FTSE 250 shares can be a formidable way to build a passive income. Established market positions and solid balance sheets give many of these companies the strength to pay a sustainable dividend. And right now, many top UK blue chips offer stunning dividend yields.
Recent gains mean the average yield on FTSE 100 stocks has dropped to 3.5%. The corresponding reading for FTSE 250 shares, meanwhile, has slipped to 3.3%.
I think I can do better than this, and am looking at the following three FTSE 250 stocks to turbocharge my passive income. Their market-beating dividend yields and dividend growth projections can also be seen below.
A £1,600 second income
The average yield for these shares comes in at a mammoth 8%. If broker forecasts prove accurate, a £20,000 lump sum invested equally across these stocks would give me a £1,600 passive income over the next 12 months.
I’m confident that they will provide a steadily rising dividend in the coming years, too. Here’s why I’d buy them if I had spare cash to invest today.
Power up
Renewable energy stock NextEnergy Solar Fund could be considered by investors seeking reliable dividend income. That’s even though keeping solar panels up and running can be expensive, earnings-denting business.
The fund can expect revenues to remain stable regardless of economic conditions. Electricity demand remains broadly unchanged even during downturns, after all.
On top of this, NextEnergy Solar receives UK government subsidies that are linked to inflation, which in turn provides cash flows with added protection.
I think the company could be a great way for investors to capitalise on the green energy revolution.
Banking star
Investing in Georgia today is riskier than it’s been for many years. The unfolding political crisis in the country threatens to undermine the country’s bright economic outlook.
But on balance, I think the risks of such turmoil are baked into Bank of Georgia’s rock-bottom valuation. Today the bank trades on a forward price-to-earnings (P/E) ratio of just 3.7 times.
With it also offering that near-6% dividend yield, I think Bank of Georgia offers terrific value right now.
This is another FTSE 250 share with considerable growth potential, in my opinion. Regional rival TBC Bank‘s near-16% profits jump last quarter (as announced last week) illustrates this point.
Property giant
HICL Infrastructure mainly invests in public sector-related assets. This leaves it vulnerable to changes in government policy and legal changes.
But, I believe it’s another great way to achieve a reliable passive income. The contracted rents it receives from its portfolio of 100+ assets provides a steady stream of revenue that it can then distribute to shareholders.
HICL’s focus on key infrastructure like hospitals, schools, railways, and roads provides another layer of strength. These assets remain in high demand at all points of the economic cycle.
Please Note.
Any article is to inform your thinking, not lead it. Only you can decide the best place for your money and any decision you make will put your money at risk. Information or data included above may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
“Company earnings remain solid across the majority of our holdings, supporting confidence in the dependable nature of the dividend and income and capital growth during 2024”
Sarika Patel, Chair
Performance
In the six months ended 31 March 2024, the Company delivered an NAV total return of 1.6% compared to the total return of the FTSE All-Share Index of 6.9%. Over the period, the share price total return was -8.2%. As an asset class, UK equities struggled to keep up with other major equity markets, notably US equities. Whilst performance has been disappointing, the portfolio continues to deliver a dependable income and the Investment Manager has re-focused current positioning in the portfolio to stocks where he sees the potential for a combination of dividend yield, dividend growth and valuation re-rating. The Investment Manager’s Review provides a more detailed explanation of the drivers of this performance.
Revenue
Total income for the six months ended 31 March 2024 increased by 13.9% to £5.4 million, compared to £4.7 million for the same period last year. Management fees decreased by 21.9% compared to the same time last year. This was in part attributable to the reduction in the management fee to a flat fee of 0.55% per annum on net assets which the Board negotiated with the Manager and took effect on 1 October 2023 at the beginning of the period.
Administrative expenses were largely unchanged, meaning that overall costs charged to revenue were down 9.4% at £368k compared to £406k in 2023. The tax charge, which increased significantly from £57k last year to £447k in this reporting period, reflects an increase in withholding tax on overseas dividends, primarily in relation to South African-listed Thungela Resources. After interest costs and tax, net earnings increased by 6% to £4.3 million with revenue per share of 9.05 pence compared to 8.60 pence in 2023 for the same period. Typically, the Company earns between 30% and 40% of its total income for the year in the first six months and this year we are in the top half of that range. As a result, given the outlook for the balance of the financial year, the Board expects that the full year earnings will be sufficient to cover the proposed dividend.
Dividends
The Board declared its plans for the dividend for the current financial year in last year’s annual report and the proposed schedule is unchanged at this time. The Company currently intends to pay three interim dividends for the current year of 5.70 pence per share. The first interim dividend was paid to Shareholders on 28 March 2024.
The Board is declaring that the second interim dividend of 5.70 pence per share will be paid on 27 June 2024 to shareholders on the register on 24 May 2024 with an associated ex-dividend date of 23 May 2024. The fourth interim dividend will be determined towards the end of the Company’s financial year. The Board’s current expectation remains for a fourth interim dividend of at least 5.80 pence per share, making a total payment for the year of a minimum of 22.90 pence per share.
Based on the share price of 277.0p at 31 March 2024, this puts the Company on a dividend yield of 8.3%, amongst the highest of any investment trust invested in equities.
Portfolio Performance
Investment Manager’s Review
Market Review
UK equities advanced over the six months to 31 March 2024 as investors expressed relief over the receding risk of a hard landing for the economy, as falling inflation raised hopes of interest rate cuts later in the year.
The start of the period was characterised by nervousness over the resilience of the global economy against the backdrop of elevated interest rates and geopolitical tensions. UK consumer spending remained subdued throughout the period, reflecting cost of living concerns after a prolonged period of high inflation. GDP data for the final quarter of 2023 confirmed a second consecutive quarterly contraction in output, signalling that the UK fell into a mild technical recession in the second half of the year. The market brushed off this news, focusing instead on the reduction in inflation from 6.7% in September 2023 to 3.2% in March 2024, at the same time as a robust jobs market supported UK wage growth running ahead of inflation. This raised the prospect of accelerating GDP growth later in the year.
Elsewhere, the strength of the US economy continued to surprise investors, with the US Federal Reserve providing a further impetus to sentiment by signalling a change in monetary policy in November 2023. This helped to persuade investors that a hard landing for the US economy could be avoided. The success of the US economy was in sharp contrast to China which was held back by an ongoing slump in the real estate sector. Geopolitics remained febrile with investors’ nerves tested by tension in the Middle East and the ongoing conflict in Ukraine.
Towards the end of the period, rate cut expectations were pared back, especially in the US where inflation data remained sticky, leading to higher Treasury yields. Around the world, growth stocks continued to outperform value stocks, while cyclical stocks outperformed defensive stocks. The US equity market continued to outperform that of the UK, helped by the heavy weighting in Technology stocks at a time of intense interest in Artificial Intelligence. European equity markets benefited from their heavy weightings in Industrials, Technology and Healthcare stocks. Late in the period, the UK equity market gained some support from a reversal in commodity prices following more encouraging industrial data from China, while oil prices moved higher on concerns over the potential escalation of conflict in the Middle East. The domestically focused FTSE-250 Index was supported by hopes of imminent rate cuts, outperforming the FTSE-100 Index during the six months, although its outperformance tailed off towards the end of the period as the prospect of early interest rate cuts receded.
Revenue Account
Total income generated by the portfolio in the period under review increased by over £650,000 or 13.9% to £5.4 million. We remain confident that the second half of the year will generate more than 60% of the total income for the period. This is the experience of the last 10 years to differing degrees and is as a result of many of the holdings declaring their final dividend for their previous financial year after our period end.
The contribution from special dividends remained low at 3.7% of the total cash dividend income. We note that share buybacks, rather than special dividends, remain the preferred method of distributing surplus capital. This partly reflects the view amongst management teams that unusually low valuations make these buybacks particularly accretive to earnings. We note that 19 of our holdings, representing 45% of the portfolio, have undertaken a share buyback so far during the current financial year.
Net revenue earnings for the six month period were £4.3 million, or 6.0% higher than last year’s £4.1 million.
We calculate that the portfolio is expected to deliver a gross dividend yield, before costs, of around 6.9% based on the income expected to be generated by the portfolio over this financial year divided by the portfolio value at the period end. While this is lower than it was at the end of the last financial year it continues to represent a significant premium to the dividend yield of the reference index of 3.8% as at 31 March 2024. Elevated interest rates are unhelpful for our investment return as they reduce the gap between the rate we pay for the bank facility and the dividend yield we earn on the portfolio, although we note that money markets are now factoring in rate cuts in late summer.
We continue to focus on identifying stocks that could help us deliver on the yield aspect of our investment objective, while also providing dividend and capital growth over time. The focus on portfolio income is consistent with our investment process given the emphasis we place on finding companies whose cash flow and dividend potential are not effectively priced in by the market.
We are aware of the challenges facing income investors, notably the preference among management teams for share buybacks over special dividends, as well as the prolonged period of geopolitical and economic uncertainty. Looking ahead, we expect many UK stocks to be able to accelerate dividend growth once this uncertainty starts to ease. This would help to reduce the concentration in dividend payments among a handful of sectors that has resulted from the unusual macro backdrop since Covid. Our index-agnostic approach allows us to consider a wide range of stocks, across the UK market, with many different drivers of earnings. We have worked hard during the period to seek out companies with strong dividend prospects from a broad range of sectors, helping to diversify the portfolio’s income.
