More significantly, Pfau found that no country – not even the US – could replicate William Bengen’s original 4% SWR finding.
Why? Because Bengen, the author of the 4% rule, relied upon a dataset containing better US historical returns than the one used by Pfau. Both archives are well credentialed. Both offer a version of the past. But the differences between the numbers reveal there’s nothing inevitable about the 4% rule – even if you invest solely in the US.
Should US assets exhibit a moderately worse sequence of returns in the years ahead than they did in the past, then future American investors may have to anchor on a 3% rule – or something nastier still.
That’s a plausible outcome. Hence retirement researchers have turned to international datasets and Monte Carlo studies to challenge the assumptions embedded in the US’s exceptional past returns. (I’ve previously used one such database to determine a World SWR of 3.5%.)
Monte Carlo methods, or Monte Carlo experiments, are a broad class of computational algorithms that rely on repeated random sampling to obtain numerical results. The underlying concept is to use randomness to solve problems that might be deterministic in principle. The name comes from the Monte Carlo Casino in Monaco, where the primary developer of the method, mathematician Stanisław Ulam, was inspired by his uncle’s gambling habits.
The Danger to Certain (Overvalued!) Stocks and Funds – Including GAB
The real risk here is that more short-term volatility will kick in as this “vibe-induced wall of worry” causes some investors to sell, triggering others to sell, and so on. That’s what happened in 2022, and that’s what we’ve seen in the last few months.
Of course, this is a buying opportunity for the patient, but not all assets are good buys in such an environment.
Which brings me back to 11.6%-yielding GAB. It’s a value-focused CEF that holds great stocks like American Express (AXP), Mastercard (MA) and Deere & Co. (DE). That makes it a solid buy most of the time – but not now. Here’s why:
GAB’s Big Premium Puts It at Risk
A key thing to keep in mind with CEFs is that they tend to have a fixed share count for their entire lives, and as a result can trade at different levels in relation to the value of the investments they hold.
In GAB’s we’re looking at an 8.6% premium. In other words, buying GAB now would mean buying Mastercard, American Express and the like for more than we would if we simply bought them on the open market.
Not good! And it’s why we really want to avoid GAB now, with more volatility likely.
Worse, GAB’s premium has shot up in recent weeks, not because the fund’s market price is skyrocketing (it’s flat year-to-date, including reinvested dividends), but because the selloff has caused its NAV to fall steeply, while its market price has levitated.
GAB’s Wile E. Coyote Moment
A fund that has an unusually high premium, a total price return that’s hovered near breakeven year to date and a negative total NAV return year to date is exactly the kind of fund that’s perfectly set for a sudden, steep selloff when investors notice. And if the “vibes” stay depressed, investors will notice sooner rather than later.
But there is a silver lining here: When that moment comes, the mainstream crowd will probably overreact to the downside, creating a big discount on GAB. That’ll be a great time to buy, so put GAB on your watch list while we wait for that to happen.
Forget “Vibes”: These 5 MONTHLY Dividends (Yielding 11.6%) Are Primed to Soar
While overhyped funds like GAB wobble under the weight of soft data and rising premiums, we’re zeroing in on something that is VERY rare indeed: 5 cheap dividend funds kicking out a huge 11.6% average payout.
Okay, maybe the fact that these 5 dividends are cheap now isn’t entirely surprising, given the selloff we’ve seen. But I think you’ll agree that this is: These 5 powerful funds pay dividends monthly.
And with a yield like this, you’re looking at $11,600 per year on dividends on every $100K investment. That’s $967 a month!
I think you’ll agree that it’s rare to find even one monthly payer among the popular names of the S&P 500. But CEFs give us many more to choose from, including these 5 cash-rich funds.
When today’s panicked investors discover just how solid these funds’ monthly payouts are, I expect them to flock into them, sending their prices higher (and compressing their discounts down to nothing).
Professional fund buyers reveal their most recent buys and sells, and share their outlook for the months ahead.
23rd April 2025
by Lucy Loewenberg from interactive investor
Global markets have been experiencing a notable pick-up in volatility after US President Donald Trump’s tariffs sparked a trade war. This led to a downturn in stock markets and growing concerns over economic instability. But professional fund buyers always take a long-term view on the current economic environment and find new ways of positioning their portfolios.
Every quarter, our multi-manager panel participants reveal their current bull and bear points. They also discuss the new funds and investment trusts they have bought, increased their holdings in, and trimmed or sold.
Peter Hewitt, manager of CT Global Managed Portfolio Trust
Reason to be bullish: growth in both the UK and Europe has been flatlining over recent quarters. There are, however, signs that as we move through the year some modest upward momentum will emerge. Germany announced a major boost to defence and infrastructure expenditure, while in the UK strong real wage growth should feed through to improved consumer spending. Interest rates in both areas look set to fall further.
Reason to be bearish: the uncertainty around US policy has reached heightened levels and appears to have begun to affect business confidence and investment plans. Tariffs will reduce growth and raise inflation in the US. Growth will slow in the US as a consequence. This is a concern for equity markets.
Bought: having been out of favour for a considerable period, European equity markets look better placed particularly at a time of much higher level of uncertainty, which is affecting the US. That’s why Hewitt has bought JPMorgan European Growth & Income Ord
JEGI
A trust he describes as the best performer in the European sector over most time periods, run by an experienced team. “They employ a disciplined investment approach, which tightly controls country and sector weightings but allows stock selection to generate consistent outperformance,” he says. A dividend equal to 4% of year-end net asset value is paid out in quarterly instalments over the next year.
Increased: Hewitt has increased his holding in Oakley Capital Investments Ord
OCI
A private equity investment trust.He says: “There are good indications that it looks set for a stronger next few years in terms of net asset performance.”
Hewitt notes that the underlying performance from key holdings in the portfolio continue to be strong. In addition, prospects for realisations over this year have improved, which could result in uplifts to the net asset value. The trust has cancelled its dividend to devote more resources to share buybacks, the aim being to narrow the discount, which remains wide at -33%.
Sold:Care REIT Ord
(previous name Impact Healthcare) has been sold following receipt of a bid by a US real estate investment trust called CareTrust REIT Inc
CTRE
Care REIT owned a portfolio of care homes across the UK, but did not operate them. Recent full-year results saw a small rise in the net asset value and the forecast of another increase in the dividend for the shares to yield 8.5%, before the bid.
The price tag represented a premium of 33% to Care REIT’s closing price on 10 March. Hewitt says the share price was on a discount of over -33%, which has been persistent for some time. The offer came in at a -9% discount to asset value and was recommended by the board.
“Although this represented a useful uplift, it is disappointing that a well-run company has been acquired at a discount to net asset value,” says Hewitt.
How US and global fund managers are responding to the sell-off
Vincent Ropers, co-manager of IFSL Wise Multi-Asset Growth & IFSL Wise Multi-Asset Income
Reason to be bearish: the unpredictability of Donald Trump’s policies is creating a chaotic economic environment globally with a level of uncertainty usually reserved for crises. The use of tariffs is threatening a global trade war, which is likely to dampen growth and fuel inflation.
Reason to be bullish: global economies, particularly in the US, remain on a relatively strong footing so far, however, so talks of a recession could be premature if cooler heads prevail in trade negotiations over the next few weeks leading to a reasonable, and manageable, middle ground.
Bought: Ropers added a new position in the newly launched Achilles Investment Company Ord
AIC
This small investment trust (£54million) will target other investment trusts in the alternatives space — property, infrastructure, private equity — which trade at wide discounts and where an activist strategy could help maximise value for shareholders. “The managers are well known in the industry, and to us, being part of a joint venture with Odyssean Capital that we own,” says Ropers.
He believes that Achilles’ approach to working alongside existing investors to realise value in a small number of investment trusts without a hidden agenda should benefit shareholders.
Increased: he added to his positions in listed infrastructure and renewables over the quarter, via a basket of investment trust names where he thinks the pain suffered over the past couple of years could be starting to come to an end. These include HICL Infrastructure PLC Ord
HICL International Public Partnerships Ord
INPP
Renewables Infrastructure Grp TRIG0.88%, Greencoat UK Wind UKW1.62%, Bluefield Solar Income Fund BSIF0.94% and Foresight Solar Ord FSFL1.74%.
Ropers says that many trusts in the sector over-issued shares at a time when they were seen as the only place to get a reliable income when government bond yields were low. “In a higher-rate environment, valuations had to be adjusted, and these trusts now need to prove their worth to investors faced with more income-generating choices,” he says.
Discounts of -25% to -35% and attractive dividend yields provide a margin of safety, adds Ropers.
He adds: “From a timing standpoint, the sector has attracted interest from private buyers and activists recently, and boards are under pressure to show willingness to address the wide discounts.”
This, he thinks, could provide an interesting entry point into the sector.
Sold:he also exited Care REIT following the bid by a US-based competitor. “The bid illustrates how the wide discounts in the listed property sector are now pricing in a lot of downside risk and can present opportunities,” he says.
Reason to be bearish: even if there is some roll-back for specific countries, we think that the unexpectedly high tariffs implemented by the US are going to have a meaningful drag on both the US economy and elsewhere.This will occur through a real income squeeze in the US due to higher goods prices and a demand reduction for major exporting economies elsewhere.The risk of recession has jumped meaningfully higher since the implementation of reciprocal tariffs.
Reason to bebullish: we don’t see large imbalances in the economy and so believe that any recession could be relatively mild by historical standards, with it being mostly a policy choice.
Bought:Ibrahimpasic opened a position in the Janus Henderson Tabula Euro AAA CLO ETF. This is a recently launched strategy, based off a long-standing track record of the European Securitised Debt team at the firm. “This strategy offers exposure to an appealing asset class from a yield and diversification perspective, with minimal interest rate duration,” says Ibrahimpasic.
Increased: she has added to her position in the Muzinich Global Short Duration Investment Grade fund, which is run by an experienced team. “It seeks to invest in high-quality paper with an average duration of around 1.5 years,” says Ibrahimpasic. Most of its assets are invested across Western Europe, while banking and diversified financials are leading industry exposures.
Sold: she closed a small position in the Janus Henderson Global Sustainable Equity fund, which invests in growing companies with durable, competitively advantaged business models, and high sustainability credentials. “The decision was primarily based on seeking more regional equity exposure as opposed to investing in a global strategy,” says Ibrahimpasic.
Simon Evan-Cook, manager of the Downing Fox Funds
Reason to be bullish: real wages are still growing faster than the cost of things that people want to buy with those wages, which means they can buy more of those things. This is good news, albeit most economists see it as bad news. But that’s economists for you.
Reason to be bearish: tariffs are clearly the talk of the town at the moment. Even if the tariffs themselves don’t cause an economic slowdown, the fear and uncertainty caused by them could still do the trick.
Bought: global equity fund Nutshell Growth was recently added. It is managed by Mark Ellis, who founded Nutshell Asset Management in 2019. Evan-Cook appreciates the fact that it’s underpinned by a focus on high-quality companies.“But we are also impressed by the manager’s potential to add to returns by more actively trading between his holdings,” he says.
Increased: there have been no major changes for Evan-Cook this quarter, but one holding he did top up was the WS Havelock Global Selectfund. It is a global equity fund managed in a value style that, hesays,“has been doing a good job, and is well positioned to continue doing so”.
Trimmed:Evan-Cook reduced his exposure to the US dollar slightly in mid-March. “The dollar has some wonderful properties as a haven asset, but the recent noises coming out of the US government are threatening that, so we felt it prudent to reflect that in our portfolios,” he says.
Supermarket Income strikes £403m joint venture with Blue Owl in capital recycling push
Supermarket Income REIT PLC has struck a major deal with US alternative assets group Blue Owl Capital, transferring eight of its UK grocery store assets into a new joint venture valued at £403 million.
The partnership, announced on Thursday, is part of SUPR’s broader strategy to recycle capital, reduce debt, and boost long-term earnings.
The assets sold into the joint venture, which SUPR will continue to co-own 50/50, were transferred at a 3% premium to their December book value.
These omnichannel supermarkets, which support both in-store and online operations, deliver an average net yield of 6.6% and have an average unexpired lease term of 11 years.
In exchange, SUPR will receive around £200 million in cash and a recurring 0.6% management fee for overseeing Blue Owl’s stake in the venture.
It may also collect a performance fee if certain return thresholds are met. The plan is to grow the JV’s portfolio to £1 billion over time, with SUPR offering it first refusal on eligible new deals.
Proceeds will initially go towards reducing SUPR’s own debt, bringing loan-to-value down to 31% before being reinvested in new grocery store assets either directly or through the JV.
The move helps SUPR stay within its 30-40% LTV target while keeping exposure to long-term income-generating assets.
The firm said the deal strengthens its balance sheet and positions it for further growth, while bringing in a strategic US partner keen to expand in the UK grocery sector.
CEO Rob Abraham said: “For our shareholders, the JV is another important milestone in our strategy to recycle capital and grow earnings, and provides a platform for growth with specialist third-party capital.
“This follows a period of significant progress on a number of key strategic initiatives set out in November 2024, including renewing the three shortest leases in the portfolio, material cost reductions culminating in the internalisation of the management of the Company and other capital recycling activity.”
Supermarket Income REIT gets tailwind from buoyant grocery sector
Proactive Investors
Snapshot
Supermarket Income strikes £403m joint venture with Blue Owl in capital recycling push
Supermarket Income REIT making all the right moves
Supermarket Income’s Blue Owl deal is sensible, say analysts
I’ve decided to crystalize the profit in MRCH, even though the plan was for it to be a long term holding, to make a capital gain, to be re-invested into the portfolio but a return of 8% in two weeks is too much to lose in the current markets. If the markets reverse then I will buyback but if/until it will be re-invested into a higher yielding Trust.
Cash for re-investment £9,192.00. Current xd cash £592.00
This 7-share ISA portfolio could generate a second income of £16,000 in retirement !
A £20,000 lump sum spread equally across these FTSE 100 and FTSE 250 shares could deliver a significant second income for retirees.
Posted by Royston Wild
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.
Investors with £20,000 in a Stocks and Shares ISA have many ways to build a second income. Here’s one imagined ISA portfolio to consider that could deliver a large and lasting passive income.
7 high-yield heroes
Dividend share
Sector
Dividend yield
HSBC
Banking
6.5%
Legal & General
Financial services
8.8%
Vodafone
Telecommunications
6.2%
Bluefield Solar Income Fund
Renewable energy
9.3%
M&G
Financial services
10.5%
Pennon Group
Utilities
5.9%
Taylor Wimpey
Construction
8.5%
The portfolio is loaded with high-yield shares that — if broker forecasts prove correct — could provide an above-average second income.
And with diversification across both defensive and cyclical sectors, it can provide stability during economic downturns and the potential for dividend growth over the long term.
Water supplier Pennon Group and Bluefield Solar IncomeFund are vulnerable to higher interest rates that depress asset values and increase borrowing costs. However, the essential nature of their operations means earnings remain broadly stable over time, making them reliable dividend payers.
Likewise, housebuilders such as Taylor Wimpey can suffer when elevated interest rates put pressure on homebuyer affordability. Yet thanks to their strong cash generation, they can still be a reliable source of dividends in rougher patches.
Robust financial foundations also make Legal & General and M&G solid dividend plays (latest financials showed their Solvency II ratios at 232% and 223% respectively). This gives them strength even when pressure on consumer spending dents revenues.
Vodafone could be a riskier pick due to its high debt levels. Indeed, it recently cut shareholder payouts in a bid to rebuild the balance sheet. But I’m confident dividends will rise strongly over the long term, driven by the growing digital economy and the firm’s emerging market exposure.
Brilliant bank
HSBC is a dividend share I’m considering adding to my own portfolio. I feel its focus on fast-growing Asian economies could deliver substantial earnings and dividend growth over the long term.
The FTSE 100 bank isn’t having everything its own way at the moment though. Conditions are tough in China, and particularly in the real estate sector. And they could get more challenging if global trade tariffs keep rising.
But the outlook for its Asian markets remains bright further out as as population numbers and disposable incomes boom. Statista analysts think banks’ net interest income across ASEAN nations will rise around 4% each year through to 2029.
In the meantime, HSBC’s strong balance sheet should (in my opinion) allow it to keep paying large dividends even if profits stutter. Latest financials showed its CET1 capital ratio at a chunky 14.9%.
A £16k second income
If forecasts are accurate, a £20k lump sum spread across these shares in an ISA would generate a £1,600 annual passive income. That’s based on an average 8% dividend yield.
If the dividends remained unchanged and were reinvested, they would — after 30 years — create a portfolio worth £201,254. Thanks to the miracle of compounding, that would then provide a second income of just over £16k a year. That said, making this kind of assumption for seven different stocks is tricky. Some may boom but others may struggle in the decades ahead.
Yet their combined dividend income could feasibly be greater than I’ve suggested as I think these shares could deliver significant capital gains as well as a rising flow of dividends.
Supermarket Inc REIT – Strategic Joint Venture with Blue Owl Capital
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
SUPERMARKET INCOME REIT PLC
(the “Company”)
STRATEGIC JOINT VENTURE with blue owl Capital MANAGED FUNDS seeded with £403m of uk supermarkets
Supermarket Income REIT plc (LSE: SUPR), is delighted to announce that it has entered into a strategic joint venture (the “JV”) with funds managed by Blue Owl Capital (“Blue Owl”), a leading US alternative asset manager with over $250 billion of assets under management. This is part of the Company’s ongoing strategy to recycle capital at attractive valuations and grow earnings.
JV transaction
The JV has been seeded with eight high yielding, omnichannel supermarket assets from SUPR’s existing portfolio (the “Seed Portfolio”), which have been transferred into the JV at a 3% premium to book value, as at 31 December 2024. The Seed Portfolio has a combined value of £403 million, an average net initial yield of 6.6%[1] (Cap Rate of 7.1%) and a WAULT of 11 years.
The Company will retain a 50% stake in the JV, and therefore will receive a net cash consideration of c.£200 million in respect of the sale of the assets. It will also receive a management fee of 0.6% per annum of the gross asset value for the ongoing management of Blue Owl’s interest in the JV and potentially a performance fee if the JV meets certain financial targets.
The JV provides a platform for further growth, seeking to acquire additional high yielding supermarket assets, with a view to grow the assets of the JV up to £1 billion over the coming years. The intention of the JV partners is to scale the vehicle, whereby the JV will have a right of first refusal over pipeline assets which meet specific investment criteria.
The Company believes that the principal benefits of the JV for shareholders are as follows:
· Earnings accretion to SUPR through redeployment of capital, ongoing management fees and a potential performance fee
· Leveraging the expertise of the Company’s management team of sector specialists, increasing AUM and, as the JV’s assets grow, SUPR will further benefit from capturing the management fees on an enlarged portfolio
· SUPR will retain an ongoing interest in a longer-term potential pipeline of assets that will remain in the JV structure
· Bringing on board a strategic capital partner with ambitions to grow its exposure in the UK grocery sector
Use of proceeds
The proceeds from the JV will be used to reduce debt in the near term and to invest in other supermarkets either directly for SUPR or indirectly through the JV, based on the investment profile of assets. Following receipt of proceeds from the JV, which is expected to be financed at c.55% LTV shortly after completion, the Company will have an LTV of c.31%. Through redeployment of capital the Company expects to operate at the upper end of its target LTV range of 30-40%, which will include its share of assets and net debt in the JV. The Company will continue to keep all capital allocation options under review.
Robert Abraham, CEO of Supermarket Income REIT, commented:
“The JV with Blue Owl’s managed funds brings a high quality, strategic capital partner that shares our conviction in the value of high yielding UK supermarkets. With the potential to grow to £1bn over the coming years the JV partnership represents Blue Owl’s managed funds’ first major investment in the UK grocery space and is a strong endorsement of the expertise and track record SUPR has established in this market.
For our shareholders, the JV is another important milestone in our strategy to recycle capital and grow earnings, and provides a platform for growth with specialist third party capital. This follows a period of significant progress on a number of key strategic initiatives set out in November 2024, including renewing the three shortest leases in the portfolio, material cost reductions culminating in the internalisation of the management of the Company and other capital recycling activity.”
Marc Zahr, Co-President and Global Head of Real Assets at Blue Owl, said:
“SUPR is the leading UK grocery real estate investor, and we view them as the right counterparty as we execute on our first major transaction in the UK grocery sector. We see an opportunity to generate attractive returns from these assets, which are underpinned by the growing and highly resilient UK grocery sector. We look forward to working with SUPR to grow the JV, as we execute on an attractive pipeline of UK assets.”
An 11% yield? Here’s the dividend forecast for a FTSE 250 powerhouse
Jon Smith outlines one income stock that already has a high yield but explains why the dividend forecast indicates even more potential.
Posted by
Jon Smith
FSFL
Image source: Getty Images
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Over the past five years, I imagine many income investors will have encountered the Foresight Solar Fund (LSE:FSFL). Incredibly, the dividend yield has never materially fallen below 6%, currently sitting at a very respectable 9.84%. But based on dividend forecasts, things could get even better in the next couple of years.
Company specifics
The UK-listed investment trust allocates money to solar energy and battery storage assets. The portfolio includes 58 solar farms across the UK, Spain, and Australia. It makes money primarily from selling the electricity to businesses via long-term purchase agreements. It can also sell electricity directly into the market at prevailing market rates.
Given its contractual agreements, its cash flow has historically been reliable and strong. As a result, it has paid out quarterly dividends, which it aims to grow year by year. When including the latest dividend, which was declared in February, the business has paid out 2p per share for the past year. As a result, I can calculate the current yield. I used the total figure from the past year of 8p and divided it by the current share price of 81.3p.
The current forecasts indicate that the quarterly dividend will continue to be paid. Starting in June, the next dividend is expected to rise to 2.1p per share and stay at this level for the subsequent four payments. In June 2026, this is expected to rise again to 2.19p per share. Finally, in June 2027 it could rise to 2.27p per share.
So if I take the calendar year for 2027, an income investor could expect to receive two lots of 2.19p and two lots of 2.27p. This would total 8.92p. If I assumed the share price would stay the same, the dividend yield would rise to 10.97%.
Of course, any investor needs to be careful when trying to predict the future. The risk is that the share price either rises or falls over this period. Over the past year the stock is down 1%. But if we see a larger move either way in 2026 or 2027, the yield could be higher or lower than the roughly 11% estimated.
One to consider?
I think it’s reasonable to assume that the dividends can keep growing. The dividend cover is currently at 1, which means the current earnings fully cover the income payments. This is good, and as long as this stays between 1 and 2, I don’t see a risk of income being cut.
One risk is the volatility in electricity prices. Should they fall in the coming year, it would negatively impact the fund’s revenue. Even with this, I think it’s a great stock for income investors to consider buying for their portfolio.
