Income and Growth 2
Property 4
Loans 2
Renewables 3
Category: Uncategorized (Page 285 of 344)
ISA’s
by This Is Money
Income funds and dividend-paying stocks continue to be popular among investors this year as they hunt steady returns.
These high yield investments can help to generate extra cash to help in the immediate term, while compounded interest can further boost gains over the long term.
Income-seekers: Investors are looking to income funds and bonds for steady returns
And as the tax burden rises as a result of frozen thresholds, holding income-generating assets in an Isa is more valuable than ever.
We ask experts where income-seeking investors should consider parking their cash.
Why invest for income?
While inflation might be nearing the Bank of England’s 2 per cent target, it continues to eat into savings pots and banks are starting to cut their savings rates.
Adding dividend-paying investments into your portfolio can provide you with reliable income and capital growth.
If you’re looking for shares and funds that will generate income, you will want to target those with a high yield. The higher the yield the more cash it pays out relative to the cost of the fund.
Jason Hollands, managing director of Bestinvest notes that investors ‘should not necessarily pursue the highest yields as this might come at the expense of growth potential.
‘If you need your investments to support you in retirement over many years, it is important that the capital value isn’t eroded and payouts rise over time to offset inflation. Equity income fund offer greater potential for this than bond funds or infrastructure.’
Darius McDermott, managing director of FundCalibre says: ‘Prioritising income in your Isa has multiple benefits: pocketed yield can supplement your lifestyle or help pay the bills, while compounded interest can further boost capital gains over the long term.’
Diversifying your portfolio across different investment styles, assets and geographies will be crucial to ensure it keeps pace with inflation.
Where should income-seeking investors look?
If you are looking to invest for income, you can include any individual shares in companies that pay out dividends.
There are also funds and trusts designed specifically for income, which may be a simpler option.
If you are looking to invest in income funds, look for those with ‘inc’ in their title, rather than ‘acc’ which indicates growth. ‘Inc’ funds will pay dividends straight to investors rather than reinvesting it back into the fund.
Steady Income in Retirement Is Key to Happiness After You Call It Quits
There are plenty of options available to income-seeking investors across equities, bonds and property, as well as alternatives like renewable energ
Dan Coatsworth, investment analyst at AJ Bell, says: ‘The UK market is blessed with lots of income opportunities, many of which pay higher dividend yields than you might find in other geographies such as the US. That is music to the ears of people in retirement who might be reliant on their investments to generate an income to pay the bills.
‘A lot of the UK equity income funds are concentrated in the same group of stocks, principally in the banking, oil and life insurance sectors where some of the most generous dividends can be found.
“The UK market is blessed with lots of income opportunities “
Dan Coatsworth, AJ Bell
‘Earnings growth is low or unpredictable in these sectors, hence why companies use generous dividends to make their shares attractive to investors.’
Paul Angell, head of investment research at AJ Bell favours Man GLG Income which invest in ‘undervalued and unloved companies… those trading below their replacement cost and those where the market appears to be undervaluing profit streams.’
He says: ‘Fund manager Henry Dixon is very experienced and his analytical mindset provides a level of pragmatism that allows the fund to navigate through a variety of market conditions.
‘This is a very actively managed fund, which can diverge significantly from the index and have high levels of turnover. These factors often result in both the fund’s volatility and transaction costs being elevated.’
Hollands singles out Blackrock UK Income which backs companies ‘with strong dividend growth potential rather than the highest payouts today.’
Its top holdings include Shell, AstraZeneca, Rio Tinto and HSBC, and it has a current yield of 3.9 per cent.
Bonds are back in favour
Fixed income can also be a good start for investors looking to add some income to their portfolio. In an era of ultra-low interest rates, bonds were yielding close to 0 per cent meaning they were overlooked by investors.
With rates now at higher levels, investors have fallen back in love with bonds which have ‘reclaimed their rightful place as an income staple,’ says McDermott.
Yields on investment-grade corporate bonds are at their highest levels in years, giving investors the opportunity to lock in income for the foreseeable future.
McDermott favours the Liontrust Sustainable Future Monthly Income fund and Royal London Corporate Bond, both of which currently offer a yield exceeding 5 per cent.
‘Risk averse investors may prefer government bonds, such as gilts or treasuries, which also currently offer competitive yields,’ he says. ‘Historically, they have a negative correlation with equities at times of market stress and therefore can anchor your portfolio should stocks take a dive.’
Jason Hollands recommends TwentyFour Corporate Bond fund, which focuses primarily on investment grade bonds, although it invests in government bonds too.
‘The fund has the flexibility to invest up to 20 per cent in riskier, high yield bonds (those issued by companies with less financial strength). However, in practice these currently represent just 6.4 per cent of the fund.
‘The latest yield on the fund is an inflation and cash beating 6 per cent, with distributions made to investors on a quarterly basis.’
Cheap investment trusts offer attractive yields
Investment trusts also offer opportunity for income because, unlike open-ended funds, trusts can hold back up to 15 per cent from their investments and use it to supplement dividends in future years.
City of London Investment Trust is unrivalled when it comes to payouts having increased its dividend for 58 consecutive years.
Coatsworth says: ‘City of London Investment Trust has a blend of value and income for its investment style. Its 0.37 per cent annual charge is among the lowest in the UK equity income space and a 5 per cent yield is higher than the FTSE 100 which offers 3.9 per cent.
‘One can understand why this trust is so popular among investors given this enhanced yield, with City of London regularly featuring among the most bought investment trusts on the AJ Bell platform.’
Hollands recommends Murray Income Trust which has ‘produced consistent long-term performance, especially in weaker market environments.’
It has grown its dividend every year since 1973 and has a current dividend yield of 4.6 per cent.
He also recommends Temple Bar Investment Trust, managed by value investors Nick Purves and Ian Lance.
‘With the UK market currently unloved and valuations very cheap compared to global equities and longer-term trend, this is exactly the sort of environment throwing up incredible opportunities for the team.’
Trusts focusing on alternative assets like renewable energy, shipping and supermarkets can also provide a reliable income source, says McDermott.
‘Many of these trusts currently trade at substantial discounts to their NAV, despite still offering an attractive and stable dividend, presenting an exceptional opportunity for investors.’
Compound growth: A powerful argument for investing long term
This Is Money
Investing over many years eventually reaches a ‘tipping point’ where your returns double what you’ve put in to date, highlights new research from Interactive Investor.
In a powerful argument for investing long term, compound growth can account for an ever larger share of your portfolio or pension fund over the years.
Putting £250 per month into investments returning 5 per cent a year would see a gain of £83 on your £3,000 total contributions, or 3 per cent, in year one.
This means that your returns after that year would represent just a small percentage of the total pot.
But by year 10, the power of compounding would mean the portion delivered by investment growth would make up 30 per cent of the overall portfolio, and by year 20 it would be 72 per cent.
At year 26 it would hit 105 per cent – with a pot containing £78,000 worth of your monthly contributions over the period now worth £160,229.
Then you’ve reached the tipping point where your returns double what you’ve put in.
If you paid in the same amount but achieved an annual investment return of 7 per cent, it would take 18 years to reach the investment ‘tipping point’, calculates ii.
How I’d invest £20,000 in a Stocks and Shares ISA to aim for £2,494 in passive income.
The Motley Fool
By Stephen Wright
The threshold for dividend taxes is coming down to £500 this year. As such, a Stocks and Shares ISA has never been a more valuable resource for investors looking to earn passive income.
A new financial year brings a new opportunity to invest up to £20,000 in an ISA. And I think that kind of investment today could well grow into something paying £2,494 per year in dividends.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
Investment returns
What does it take to turn £20,000 into a portfolio returning £2,494 per year in passive income? The answer is 30 years and the ability to reinvest the dividends each year at 4%.
Right now, there are a number of stocks – both in the UK and the US – that have a 4% dividend yield. But investors should be cautious about withholding taxes on dividends from US companies.
UK investors pay a 30% withholding tax on dividends from US companies (reduced to 15% with a W-8BEN form). And a Stocks and Shares ISA doesn’t offer protection from this.
What looks like a 4.5% dividend might therefore amount to a 3.8% return for a UK investor. I wouldn’t rule out buying shares in US companies on this basis, but it’s worth keeping in mind.
Dividends vs. growth
There’s more than one way to aim for a 4% average return over 30 years. The first is by buying shares that are offering that kind of return right now and hoping they’ll maintain this.
The other is by investing in stocks that offer a lower dividend yield with the expectation they will distribute more in future. With my own portfolio, I try to stay open to either approach.
When I invest, I look to buy whatever I think the best opportunity is at the time. Sometimes that’s stocks with high dividend yields and other times it’s shares in companies with growth potential.
Right now, real estate and utilities look like promising sectors to me. They happen to be traditional areas for dividend investors, but I think there are unusually good opportunities at the moment.
Which stocks should I buy?
With their 6.6% dividend yield, I think shares in Primary Health Properties (LSE:PHP) look attractive at the moment. The company is a real estate investment trust (REIT) focused on GP surgeries.
Like a lot of REITs, the business has a lot of debt, which could be an issue over time. It’s possible the company might have to issue equity – diluting its shareholders – if it can’t refinance.
Even if this happens, though, I think the dividend yield should still be attractive. And with the firm’s portfolio largely occupied by government entities, the risk of rent defaults is low.
Furthermore, the company has managed to steadily increase its rents with inflation and the dividend has grown as a result. Below 100p, it’s on the list of stocks I’d be happy to buy today.
Dividend income
Obviously, the best investments are the ones that offer high yields with future growth potential. I think Primary Health Properties falls into this category.
There’s more than one way to build a passive income portfolio. With £20,000 to invest today, I’d look to keep an open mind and identify opportunities wherever they present themselves.
££££££££££
Current share price 90.25p dividend 6.87p yield 7.5%
If/when the share price goes up the yield will fall and then the Trust
could be sold and the profit invested into another high yielder to grow
the Snowball. Or the Trust could be kept for it’s buying yield and
some shares sold to book any profit.
Merchants Trust
U had done your research and u knew that MRCH was a dividend hero, an Investment Trust that has paid regular gently increasing dividends.
Warren Buffet says “To buy when their is blood in the streets”.
The price to buy was around 320p and the dividend was 27.1p
a yield of 8.5%, which u should receive as long as u hold the Trust.
Without hindsight u have no idea if the Trust would fall further but
u are only a yield hunter, so the chance was worth taking.
The graph with earned dividends but not re-invested in MRCH.
When the Total Return reached 640p u decide to take out your
initial stake and re-invest in another high yielder.
MRCH current price is 523p and their latest dividend
Chairman’s Statement
Dear Shareholder
The Merchants Trust was established in 1889, so in 2024 we mark the one hundred and thirty fifth anniversary. We are all proud to be involved with a company that has not just endured for such a long time, but remains relevant to shareholders today. Merchants is one of the oldest listed investment trusts. Our name, as with some of our eldest peers, hints at our history and origins and Merchants was originally incorporated to invest in railroad assets in the burgeoning North American market. One of the most important factors in Merchants success over such an extended period of time has been its adaptability and its continued focus on the needs of investors and an ability to navigate investment markets to continue to deliver attractive investment returns.
Merchants shareholders have witnessed both World Wars, many smaller scale conflicts, and significant geopolitical and economic shifts in the world. During the past 42 years, including the proposal this year, I am proud to report that the company has managed to provide a rising dividend every year.
Whilst investing is never ‘easy’, the financial year to the end of January 2024 was especially challenging. Some days heralded recovery and others felt like economies and markets were falling badly backwards. The newsworthy events of 2023 could justify an article in their own right and included (overseas) bank failures, equal measures of utopian and dystopian views of a future shaped by AI, war & conflict (sadly now more than one major ongoing conflict) and natural disasters. Geopolitics often felt ‘on the brink’, but we seem at least to have stayed just the right side of the line for now, to avoid wider global involvement.
The market backdrop was generally one of concern over inflation and how central banks would use interest rates to control it, but at the same time maintain growth. Bond markets reflected the volatility of investor’s expectations and risk appetite oscillated during the year. In turn this drove equity market fluctuation. For global investors the year was positive, though those gains were generally narrow and led by a small number of US tech stocks, particularly on the back of ‘AI fever’ triggered by the launch of Chat GPT’s GPT-4 model in March. A new narrative for future economic development was born at that point, and markets followed it with eagerness.
The UK market was not buoyed in the same way by Tech and AI stocks. Its returns were more muted and produced only a modest positive total return. This positive total return was a great example of how dividends can make a difference. The FTSE All-Share started the period at 4,255.7 and ended at 4,173.1 – a fall of 1.9%. Total return however, including dividends of 3.8%, produced a positive total return of 1.9%.
Performance
Even though the UK market finished the period marginally up on a total return basis as noted above, Merchants’ Net Asset Value total return for the year unfortunately lagged the benchmark, recording a fall of 3.1%. This is obviously very disappointing and the board has engaged with the portfolio manager and the AllianzGI team to understand the contributions, both positive and negative, to this result. Whilst we clearly need to monitor short term performance, this disappointing result comes after two very good years when the portfolio outperformed the benchmark and we recognise that the longer term (3 and 5 year) track record of the trust is extremely strong.
Shareholders will be aware that the UK stock market is still a mix of both lowly priced stocks some of which offer ‘value’ and higher rated ‘growth’ stocks. Unfortunately, the period under review was a difficult one for the more modestly priced stocks that our manager tends to favour due to his ‘value’ investment style. Whilst this produced a relatively disappointing 1-year picture for Merchants shareholders, the longer-term record remains strong, with outperformance of both the industry benchmark, as well as the sector peer average, over 3 and 5 years.
For a value-oriented investor, a run of poor relative performance can often reflect simple under-pricing of particular types of companies, or certain cyclical sectors. With any disciplined, active management investment approach, there will always be periods when it is difficult to outperform the benchmark if the strongest performance comes from the areas of the market that do not meet the portfolio manager’s investment criteria. It should also be remembered that a period such as the year to January 2024 can often be a time when the best new ideas for investing are generated, often ahead of any improvement in sentiment or cyclical upturn.
Despite short-term headwinds, we were delighted to collect the Citywire award for Best UK Equity Income trust at their annual investment trust awards in November. The award is based around 3-year performance as well as other factors, and is therefore a welcome recognition of the returns to shareholders over the long term.
The board remains confident that the tried and tested investment strategy followed by the manager remains appropriate to meet Merchants’ objectives for shareholders over the long term.
Income
In terms of the income generated by the underlying portfolio, it was a strong year with revenue earnings per ordinary share rising 6.3% to a record 30.5p (2023: 28.7p) as dividend income received by the trust has fully recovered from the impact of the pandemic. This meant the dividend declared for the year was fully covered by earnings, as well as allowing the board to add 1.8p per ordinary share to revenue reserves.
I have written before about the importance of investment trusts being able to build revenue reserves in order to provide some protection against difficult times. This was amply demonstrated during COVID years when our revenue reserves built in good years enabled the board to maintain dividends to our shareholders even though dividend receipts from the Merchants portfolio of investments were weak. Now that dividend receipts from the portfolio have recovered the board thinks it important that we should build up reserves once again, as illustrated by the chart on page 6 of the Annual Report.
At the end of the financial year, the revenue reserve stands at 18.1p per ordinary share.
Dividend
The board is pleased to propose a final dividend of 7.1p for shareholder approval at Merchants’ upcoming AGM on 16 May 2024. Subject to that approval, that will mean a full year dividend of 28.4p (2023: 27.6p), a rise of 2.9%.
The annualised growth rate of the dividend paid by the trust over 42 years stands at 6.4%, remaining well above the rate of inflation over that period which stands at 3.8% annually as measured by the Consumer Prices Index (CPI) despite the particularly high inflation numbers evident over the past two years. The company continues to pay a high dividend, representing a yield of some 5.2% at the period end. This remains well above the sector average (4.5%), placing it in the top-ten yielders in the sector.
With 42 years of unbroken annual dividend rises, Merchants also retains its place on the Association of Investment Companies’ (AIC) Dividend Hero list – those companies having managed to consistently raise their dividend for twenty years or more.
If u had invested 10k u would have doubled your money.
The shares in MRCH which sits in your account at a zero, zilch, nothing
cost yields 5.2%
U could have another similar holding yielding around 8% a total
income of 13% on the amount invested.
Income of £520 and £800, £1,320.00. In around 7 years time u should
have received your initial stake back, again.
To grow the Snowball the 13% could be re-invested into other high
yielding Investment Trusts.
Or if u wanted to take the risk to grow your portfolio, into a Tech Trust
ATT or PCT where u know u will not lose any of your hard earned
if u can choose when to sell, although it could be multi years but that
would allow u to build up a meaningnful holding.
Tks for your lovely comments, I read everyone. Some answers to
questions asked.
I only invest in Investment Trusts because if one company cuts
their dividend it will not affect the Trusts dividend pay out.
Also Trusts have reserves to supplement dividends in times of
market panic like covid. If u are a long term holder it’s your cash
but if u are a new buyer it’s someone else’s cash.
The blog provider is Fasthosts
RENEWAL DATE PACKAGE PRODUCT AMOUNT (EX VAT) PACKAGE / CONTRACT ID
26-Apr-2024 Marketing Radar Marketing Radar
£1.00
26-Apr-2024 WP Go WP Go – 26/12/2023
Bought on offer: £1 for the first 6 months
£1.00
By
Frank Buhagiar
02 Apr
We estimate there to be 35 investment companies whose discounts hit 12-month highs over the course of the week ended Friday 29 March 2024 – three more than the previous week’s 32.
Interest rate sensitive sectors still dominate the list with renewable energy infrastructure companies taking up seven spots. UK Equity Income funds aren’t far behind with six. Will Q2 2024 bring more clarity with regards to the timing of the first rate cut? And will the number of investment companies on the discount watch list as at 30 June 2024 be higher or lower than this week’s 35?
Fund Discount Sector
Gresham House Energy Storage GRID -71.77% Renewables
LMS Capital LMS -66.91% Private equity
Life Sciences LABS -50.86% Property
US Solar Fund USF -43.33% Renewables
Menhaden Resource Efficiency MHN -41.67% Environmental
The full list
Fund Discount Sector
Pacific Assets PAC -13.80% Asia Pacific
Asia Dragon DGN -19.35% Asia Pacific
JPMorgan Asia Growth & Income JAGI -10.66% Asia Pacific Equity Inc
Scottish Oriental Smaller Cos SST -17.32% Asian Smallers
BlackRock World Mining BRWM -8.77% Commodities & Natural Resources
NB Global Monthly Income NBMI -21.58% Debt
Real Estate Credit Investments RECI -20.79% Debt
Templeton Em Mkts TEM -15.50% Emerging Mkts
Utilico Emerging Mkts UEM -20.50% Emerging Mkts
Impax Environmental IEM -11.03% Environmental
Jupiter Green JGC -31.27% Environmental
Menhaden Resource Efficiency MHN -41.67% Environmental
European Assets EAT -13.91% European Smallers
Schroder BSC Social Impact SBSI -24.82% Flexible
Pantheon Infrastructure PINT -31.12% Infrastructure
Baillie Gifford Japan BGFD -13.10% Japan
Baillie Gifford Shin Nippon BGS -18.00% Japan Smallers
LMS Capital LMS -66.91% Private Equity
Life Sciences LABS -50.86% Property
US Solar Fund USF -43.33% Renewables
Greencoat Renewables GRP -24.40% Renewables
Gresham House Energy Storage GRID -71.77% Renewables
Bluefield Solar Inc BSIF -26.69% Renewables
Downing Renewables & Infra DORE -34.28% Renewables
NextEnergy Solar NESF -33.86% Renewables
Octopus Renewables Infrastructure ORIT -32.59% Renewables
JPMorgan Claverhouse JCH -6.88% UK Equity Income
Merchants MRCH -4.96% UK Equity Income
Edinburgh EDIN -11.87% UK Equity Income
Murray Income MUT -11.73% UK Equity Income
Schroder Income Growth SCF -14.54% UK Equity Income
Temple Bar TMPL -10.24% UK Equity Income
BlackRock Throgmorton THRG -10.09% UK Smallers
Henderson Smaller Cos HSL -15.11% UK Smallers
Vietnam Enterprise VEIL -22.31% Vietnam
The Results Round-Up – the week’s Investment Trust results
Which investment trust can lay claim to being 2023’s busiest? And which fund would have made shareholders 11.6 times their original investment had they invested at the time of its launch 25 years ago? Find out in this week’s round-up.
By
Frank Buhagiar
05 Apr, 2024
Nippon Active Value Fund (NAVF), the busiest investment trust in 2023?
NAVF’s has had a busy year. Chairman Rosemary Morgan revealed: “we migrated to the Premium Listing Segment of the Official List and were appointed as preferred vehicle for the rollover of abrdn Japan Investment Trust (AJIT) and Atlantis Japan Growth Fund (AJG). The reorganisation of those holdings to align them with our own portfolio was completed by the end of November 2023”. Having hands full didn’t stop the fund managers from clocking up a 23.1% increase in NAV per share bringing the fund’s gain since launch in 2020 to 76.9%. That compares to the MSCI Japan Small Cap Index’s +7.8% (sterling) for 2023 and +15.8% since the Company’s inception.
Winterflood: “Share price TR +41.1% as discount narrowed from 16.3% to 4.2%.”
Baillie Gifford China Growth’s (BGCG) comfort blanket
BGCG’s NAV total return for the year came in at -40.9%. The MSCI China All Shares Index (sterling) didn’t fare much better, off ‘only’ -30.5%. As Chair Susan Platts-Martin writes it was a year that has “tested the patience”.
“Generally, the negative returns over the period have been driven by macroeconomics and geopolitics rather than the performance of the underlying companies in the portfolio. The listed holdings within the Company’s portfolio continue to perform well operationally, delivering 17.7% earnings growth in the financial year. What comforts us during these challenging times is our holdings’ continued strong operational performance and the knowledge that, over meaningful periods, share prices are likely to follow fundamentals.”
JPMorgan: “Looking forward, with BGCG trading in line with its peers in terms of discount, we remain Neutral.”
Pantheon Infrastructure (PINT), a full pint
PINT’s 10.4% NAV Total Return for the year was not the only highlight for the investment managers “We are particularly pleased to have fully deployed our funds and exceeded our pre-IPO NAV total return target. We look forward to continuing to build value for our investors over the long term by providing access to a diversified portfolio of high-quality, global infrastructure assets.”
Liberum: “We continue to view a wide pipeline, an experienced manager and very attractive fee structure with no performance fee and ongoing charges at 1.35% as one of the most attractive ways to access the core-plus market and remain BUYers at 115p TP.”
CT Private Equity’s (CTPE) silver jubilee
CTPE reported a 2.8% NAV total return for the year. That means those who invested in the fund at the time of its launch 25 years ago would have made a “gain of 11.6 times the original investment over the 25-year period. Significantly outperforming the stock market for the same period (FTSE All-Share 2.4 times).” Chairman Richard Gray puts the performance down to “strong underlying fundamentals for our investee companies which have recorded impressive growth in revenues and profits over the year, tempered by a slight softening in valuation multiples.”
JPMorgan: “Overall, we see no need to change our Neutral recommendation.”
Schiehallion (MNTN) looking for bootstrapped companies
MNTN’s NAV total return of -0.9% may give the impression of a relatively stable year for the growth capital provider but don’t be fooled. As the investment managers explain, “Although the year ended with a small negative return, this was the result of a weak first half followed by a recovery in the second half of the year.”
What’s more, “Companies seem to either be significantly over or under-priced. This is a perfect market for bottom-up stock pickers. Bootstrapped companies that have evaded the trappings of overcapitalisation are of particular interest to us.”
“Now could be a dangerous time to invest with the ‘herd’, it could also be the perfect time to be a contrarian.”
Numis: “The fund is attractive to many investors given its fee structure with a modest base fee and no performance fee, leading to an ongoing charges figure of 0.85%. This compares favourably with traditional private equity.”
Dunedin Income Growth (DIG) tops the rankings
DIG’s NAV total return of 6.7% for the year ended 31 January 2024 not only beat the FTSE All-Share’s 1.9%, but also beat all the other trusts in the AIC UK Equity Income sector. The strong performance is no one-off either. According to the Annual Report over five years, the NAV total return stands at 43.8%, placing the fund 3/20. All goes to show performance and sustainability are not mutually exclusive. As Chairman David Barron explains: “The Company has a clear focus on generating both total return and dividend growth while formally incorporating sustainability into its mandate.”
Winterflood: “Portfolio benefitted from underweight exposure to Basic Materials and overweight exposure to Technology.”
Temple Bar (TMPL), raising the bar
TMPL’s 12.3% NAV total return for the year ended 31 December 2023 comfortably beat the FTSE All Share’s 7.9%. That brings NAV total return since Redwheel took over the management in October 2020 to 86.7%, while the benchmark could only muster 50%. Chairman Richard Wyatt thinks there’s more to come “Your Board shares the view of our Portfolio Manager that the Trust’s portfolio continues to be priced to offer shareholders further excess investment returns in the future.”
Numis: “The shares currently trade on a c.9% discount to NAV, yielding 3.9%, which we believe offers value.”
Invesco Bond Income Plus (BIPS), above average
BIPS reported an 11.7% NAV increase for the year which, as Chairman Tim Scholefield explains, “was slightly below the 13.8% achieved by the ICE Bank of America Merrill Lynch European High Yield Index but above the average return of 8.0% for funds in the Investment Association Sterling Strategic Bond Sector.” Not all about NAV though “Our investment policy is to provide a high level of dividend income relative to prevailing interest rates and we were able to meet this objective despite the elevated returns available from bank and building society savings accounts.”
Winterflood: “The managers view a ‘soft landing’ scenario as favourable for the high yield market. Nevertheless, they see a range of risks to this scenario and therefore remain positioned cautiously.”
Merchants Trust (MRCH), long-term performance record still intact
MRCH’s -3.1% NAV total return for the year was a little off the FTSE All Share’s +1.9%. Chairman Colin Clark admits “investing is never ‘easy’, the financial year to the end of January 2024 was especially challenging. The newsworthy events of 2023 could justify an article in their own right and included (overseas) bank failures, equal measures of utopian and dystopian views of a future shaped by AI, war & conflict and natural disasters.” All of which made “the period under review a difficult one for the more modestly priced stocks that our manager tends to favour due to his ‘value’ investment style.” Nevertheless, “the longer-term record remains strong, with outperformance of both the industry benchmark, as well as the sector peer average, over 3 and 5 years.”
Winterflood: “DPS (dividend per share) +2.9% YoY to 28.4p (FY23: 27.6p), representing 42nd consecutive annual increase, with annualised growth rate of 6.4% vs CPI of 3.8%.”
JPMorgan Global Emerging Markets Income (JEMI) in it for the long term
JEMI may have posted a negative 2.4% NAV total return for the half year, but once again that was enough to beat the benchmark.
According to Chair Elisabeth Scott “performance over periods of three, five years and beyond is significantly ahead of the Benchmark”. Scott thinks this is “reflective of the Company’s long-term approach and testament to the experience of the Portfolio Managers and strength of their process.”
Winterflood: “Primary driver of outperformance relative to benchmark was stock selection within China, Hong Kong, Korea, Taiwan and South Africa.”
VH Global Sustainable Energy Opportunities (GSEO) sees green shoots
GSEO Chair Bernard Bulkin had this to say about the fund’s full-year performance: “NAV per share was 116.46p as at 31 December 2023, an increase of 7.6% from the previous year. As at 31 December 2023, the Company has achieved a 10% annualised NAV total return since IPO including dividends, which is in line with the Company’s target total return.”
What’s more, Bulkin believes he is seeing macroeconomic green shoots which “coupled with the underlying strengths of the Company, lead the Board to look forward to the year ahead with confidence.”
Numis: “GSEO’s shares have not been immune from the wider listed infrastructure weakness in 2024. Given the very limited interest rate exposure by having virtually no leverage (1.9% of NAV), and a portfolio which is generating healthy levels of cash, underpinned by a high proportion of contracted revenue, this looks unjustified.”
North American Income Trust (NAIT) designed to withstand volatility
NAIT’s -1.6% NAV total return for the year fell short of the Russell 1000 Value Index’s +2.6%. Chair Dame Susan Rice doesn’t sound too concerned: “The Investment Manager has designed the Company’s portfolio to include financially robust companies with strong income-generating potential and sound governance practices. The investment team continues to review the portfolio and seek opportunities to ensure its ability to withstand any volatility, as it seeks to protect against downside risks.”
Winterflood: “Underperformance driven by stock selection, particularly in Materials sector, and sector allocation, mainly Industrials.”
