View the article online at http://citywire.co.uk/money/article/a863053
Investment Trust Insider: issue 23 out now!
Equity income as you've never seen it before plus special reports on private equity and who's buying commercial property trusts.
Hello, welcome to the new issue of Investment Trust Insider! We’ve three more topical features on investment trusts for you.
Equity income in a new light
Investment trusts would beat other types of funds in a beauty contest because of their natural endowments, such as gearing (or borrowing) which can boost returns, and revenue reserves which can support dividends.
Yet, our first feature reveals investment trusts aren’t above using a bit of cosmetics to flatter their best features! Analysis by Numis Securities shows that by taking charges from their capital growth, investment trusts can boost the dividend yields and cover they offer. They’re not wrong to do this but it’s fascinating to see what their income yields and dividend protection would be if trusts took their charges from investment income instead.
To boldly go into private equity
Discounts – when investment trust shares trade below net asset value (NAV) – are another source of fascination to investors. For example, should the double-digit discounts on private equity investment trusts be considered attractive given they’ve narrowed so much since the financial crisis? The expert opinion in our second feature is that the sector remains good value and could re-rate further.
By contrast, commercial property trusts have seen their premiums (when shares trade above NAV) decline. The prospect of rising interest rates has cooled investor sentiment although our ‘In the Markets’ feature shows there are still buyers for trusts deemed to be resilient.
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In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
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