Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a629323

Wealth managers unveil their top income trust picks

by Danielle Levy on Nov 07, 2012 at 13:55

Wealth managers unveil their top income trust picks

The UK Growth & Income investment trust sector offers attractive yields for income-seeking clients, the prospect of capital growth and access to some of the most established managers in the business. But trading on an average premium of 2%, is the sector now looking too expensive?

James Maltin of Rathbones believes the sector is starting to look richly priced. ‘We have made money on a number of these trusts and we are not selling out, but I would caution people not to buy at these levels,’ he said.

He still views UK income-oriented investment trusts as attractive in comparison to their open-ended counterparts and is happy to remain in holdings, but is in no rush to increase exposure. He highlights Temple Bar , which is yielding 3.7% and trading on a premium of 2.2%, alongside Troy Income & Growth , trading on a 1.6% premium with a 3.6% yield, as top picks.

John Newlands (pictured), head of investment company research at Brewin Dolphin, is more sanguine, saying that even though discounts are now looking tighter and a number of trusts are trading at a premium, he is ‘staggered at the range of quality in the sector’.

‘In today’s investment climate, it is very hard to get a useful return on fixed income markets, gilts don’t look rewarding, so I still see a place for [income investment trusts],’ he explained.

He currently views Neil Woodford’s Edinburgh Investment trust as ‘far too expensive’. It has an attractive 4.3% yield, but trades on a 2.7% premium. However, Newlands says the manager has delivered even though the trust has an awkward capital structure.

Mark Barnett’s Perpetual Income & Growth remains his ‘absolute favourite’ in the sector, yielding 3.8% and sitting on a slightly smaller 1.2% premium, while he is also positive on Finsbury Growth & Income and Standard Life Equity Income .

Mick Gilligan, head of research at Killik & Co, views Nick McLeod-Clarke’s BlackRock Income & Growth as a potential buy, on a 6.2% discount and a 3.7% yield, pointing to his track record of achieving dividend growth.

‘Since the start of the year the performance in the sector has been up 17%, and they are up 13%, but I think they have done a reasonable job over time, so on a 6% discount it looks attractive to me,’ Gilligan said.

He also views Standard Life Equity Income on a 4% discount as potentially attractive, and is backing Perpetual Income & Growth over Edinburgh.

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home


As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

The Citywire guide to investment trusts

Investment trusts have proved to be a highly effective way to invest in the market. Citywire has interviewed the experts to find out more.

Investing for income in a changing environment


With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop

More about this:

Look up the funds

  • Invesco Perpetual Income & Growth Inc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the shares

  • Edinburgh Investment Trust PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the investment trusts

  • Temple Bar (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Troy Income & Growth (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Finsbury Growth & Income (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Standard Life Equity Income (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • BlackRock Income and Growth (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Lowland (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Schroder Income Growth (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • Neil Woodford
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Mark Barnett
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Nick McLeod-Clarke
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Archive

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet