Tip Watch #1: Don’t blindly buy a tracker – this actively managed fund is on the up
So says The Telegraph’s Questor Column. The actively managed fund that’s on the up? Global investment trust Brunner (BUT). Before extolling Brunner’s virtues, the above Questor article covers the stellar rise of passive tracker funds, noting that in the U.S. assets under passive management now exceed the amount managed by active funds thanks to the low fees, diversification benefits and performance record on offer.
Brunner can point to a strong track record of its own, however. Tipped as a Buy by Questor back in April 2017, the trust has since delivered a capital return of 85%, comfortably above the 64% generated by its benchmark, (70% FTSE World ex-UK/30% FTSE All Share). That’s not all. Brunner’s shares currently trade at an 8% discount to the value of its underlying assets. As Questor notes, discounts tend to close over time, offering further potential upside.
And then there’s Brunner’s dividend record. The trust has increased its payout for 52 years in a row and not by a token amount – Brunner’s dividends are up 4,629% over this period, easily above inflation’s 1,588%. Here the investment trust structure has been helpful. Unlike tracker funds, investment trusts can keep up to 15% of the annual income generated from their portfolio holdings in reserve, allowing dividends to be topped up when needed – a rainy day pot of sorts.
All of which leads Questor to conclude: “…while growing demand for passively managed funds is unlikely to cease in the short run, it would be unsurprising for actively managed funds such as Brunner to become more popular in the long run. Its relatively high historical returns, stable income track record and wide discount mean it remains a worthwhile purchase.”
Tip Watch #2: Greencoat UK Wind (UKW)
Tipped in a Midas special. In MIDAS SHARE TIPS SPECIAL: These are British businesses that lead the world, the Mail on Sunday tipster issues a rallying call to investors to Buy British, specifically those companies that are world leaders in their respective fields. Among Midas’ best of British, wind farm specialist Greencoat UK Wind (UKW).
The article highlights how UKW’s share price has been on the slide ever since energy prices turned lower in 2022. Concerns over the Government’s commitment to the UK wind energy industry have not helped either. At least here, the Chancellor’s promise in the recent Spring Budget to pump £800 million into offshore wind appears to have put paid to those worries.
And with the shares trading at a 16% discount to net assets, Midas believes, at 139p a pop, UKW’s shares offer “good value”, particularly as the fund has a “record of generous dividends”. How generous? In UKW’s latest full-year results on 29 February 2024, Chair Lucinda Riches highlighted that “With the final dividend for the year, our investors will have received over £1 billion of dividends since listing (2013)” – that generous.
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