James Yardley, senior research analyst at the VT Chelsea Managed Monthly Income fund Provided by City AM
In this weekly series, investment reporter Elliot Gulliver-Needham sits down with a fund manager for a Q&A. This week, we’re hearing from James Yardley, senior research analyst at the VT Chelsea Managed Monthly Income fund.
Top holdings
How does your fund stand out from others in the same market?
Our investors love the fund’s consistent monthly income. The fund pays out exactly the same amount for 11 months of the year with a final remainder payout with any income left over. It’s a fund of funds which combines open-ended Funds, ETFs and investment trusts.
This allows us to get income from a very wide range of sources. Alongside traditional stocks and bonds, the fund also has exposure to infrastructure, renewable energy, supermarkets, GP surgeries and care homes to name a few.
Whilst peers were forced to cut their dividends during Covid, this fund did not. The monthly dividend payout has only ever increased since our launch seven years ago and we model our dividends years ahead.
We have added a huge amount of value from our investment trusts over the past seven years even as much of the sector has struggled. We are able to vary our weights between open-ended funds, ETFs and investment trusts depending on discounts, dividend yields and market sentiment.
Another big differentiator is the fund’s costs. A traditional criticism of fund of funds is they are prohibitively expensive. With this fund’s launch, we were determined to change this – it has a very low AMC, and any discounts or special share classes it obtains all go back into the fund. Its OCF is just 0.71 per cent.
Which of your holdings are you most excited about
We’re really excited about investment trusts.
A combination of technical reasons, higher interest rates, regulations and some individual stock blow-ups has meant the sector is very out of favour. This is providing some amazing opportunities.
Our favourite holding is currently Assura. This REIT, specialising in GP surgeries, gets almost all its rent from the NHS. This is a very boring but reliable strategy. Exactly what we like.
The fund’s earnings and dividends have increased year on year over the past decade. Despite this, the share price has been incredibly volatile, having declined by over 50 per cent while the yield has simultaneously risen to almost 8.5 per cent.
The trust has also locked in the majority of its debt at very low rates for the long term. We think this trust will do very well if rates ever start to come down and, in the meantime, we are happy to be patient and collect the dividends.
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Yields just over 5% so not suitable for the blog, maybe one to consider if u are in a de-accumulation stage along with SMIF yielding 8% for a monthly income stream at the safer end of the market.
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