Investment Trusts  

Top ‘ultimate income’ investment trust named

"It’s essential that investors are aware of the way in which discount/premium pricing works, as well as the impact of gearing within the portfolios.”

If a trust's share price moves below its NAV, it is said to be trading at a discount, if it rises above, it is trading at a premium.

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Trust managers also use gearing, which is a way to multiply returns by taking on debt. Though that can backfire when the invested assets lose money and losses deepen faster.

Scott Gallacher, chartered financial planner at Rowley Turton, added: “I would probably say one of the reasons [our] clients tend to avoid investment trusts and we’re cautious on recommending them is that additional risk factor.

“With investment trusts, because you have the extra risk of discount and premium and extra movement in the value of the investment in that sense, I don’t think they suit most investors that well.”

According to AJ Bell, a portfolio evenly split between the top 10 investment trusts by total return over the past 10 years would have grown £100,000 into more than £475,000 and would be generating almost £7,000 income currently, while a portfolio evenly split between the top 10 trusts based on current yield would have turned £100,000 into just over £365,000 but would be paying out current income of almost £10,000.

Top 10 trusts by total return

Company

AIC sectorYears of dividend2018 yield on 2009 price2018 yield on 2019 priceTotal return (%age)Growth of £10,000 pot since 2009Income today on £10,000 invested in 2009
increases
BlackRock ThrogmortonUK Smaller Cos158.60%1.70%540.90%£64,091£862
Scottish MortgageGlobal373.20%0.60%523.40%£62,341£322
BlackRock Smaller CosUK Smaller Cos1610.30%2.00%519.90%£61,986£1,030
Henderson Smaller CosUK Smaller Cos1611.00%2.60%432.10%£53,214£1,101
Standard Life UK Smaller CosUK Smaller Cos126.30%1.50%402.30%£50,229£633
BMO Global Smaller CosGlobal493.80%1.10%293.60%£39,357£380
Scottish AmericanGlobal Equity Inc396.90%2.80%267.10%£36,705£689
Schroder Oriental IncomeAsia Pacific Ex Japan129.20%3.80%259.10%£35,911£915
BankersGlobal525.60%2.10%257.70%£35,773£563
F&C Investment TrustGlobal484.40%1.50%254.00%£35,398£441
Source: AJ Bell/AIC/FE. Figures to 2nd September 2019, and 30th August 2009. Figures based on AIC Dividend Heroes list and Next Generation Dividend Heroes. Dividend data based on 2018 full year payout.

Top 10 trusts by current income

Company

AIC sectorYears of dividend increases2018 yield on 2009 price2018 yield on 2019 priceTotal return (%age)Growth of £10,000 pot since 2009Income today on £10,000 invested in 2009
WitanGlobal4417.90%7%237.70%£33,767£1,792
Henderson Smaller CosUK Smaller Cos1611.00%3%432.10%£53,214£1,101
BlackRock Smaller CosUK Smaller Cos1610.30%2%519.90%£61,986£1,030
British & AmericanUK Equity Income2410.10%24%17.00%£11,695£1,012
Schroder Oriental IncomeAsia Pacific Ex Japan129.20%4%259.10%£35,911£915
BlackRock ThrogmortonUK Smaller Cos158.60%2%540.90%£64,091£862
Scottish Investment TrustGlobal358.50%4%158.10%£25,813£852
AthelneyUK Smaller Cos168.20%4%209.00%£30,897£824
Henderson Far East IncomeAsia Pacific Ex Japan118.00%6%132.80%£23,283£801
Edinburgh InvestmentUK Equity Income148.00%5%147.40%£24,743£798

Source: AJ Bell/AIC/FE. Figures to 2nd September 2019, and 30th August 2009. Figures based on AIC Dividend Heroes list and Next Generation Dividend Heroes. Dividend data based on 2018 full year payout.