Fund of the week: Tap income in small businesses

Lowland may be in the name, but lowly in performance it isn't. Lowland Investment Company (LSE: LWI) "leaves its UK equity income peers trailing in its wake", says Leonora Walters in Investors Chronicle.

The trust, which has consistently beaten its benchmark in recent years, has delivered a return of 24.7% over one year, 85.4% over three and 325.2% over five years, albeit after some short-term volatility.

Walters puts this down to manager James Henderson's decision to diversify away from the mega caps' favoured by his peers, which he believes are in sectors facing long-term decline.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Lowland's aim is to generate above-average returns of both capital and income over a medium to long-term horizon. It strives to have no more than half of its portfolio value in FTSE 100 stocks, with the rest made up of small and medium-sized firms (SMEs). Around 8% is invested in Aim-listed companies.

The trust has an ongoing annual charge of 0.62%. Around 30% of it is in industrial stocks, such as engineer Senior, while 26% is in financials, 13% in basic material stocks, and 12% in oil and gas.

Touchscreen technology specialist Carclo has proved a recent strong performer for the company, while Henderson has raised its holdings of strong dividend payers, such as BP and Rio Tinto.

Swipe to scroll horizontally

Senior Plc	3.60%
Royal Dutch Shell	3.30%
BP	2.60%
Hiscox	2.40%
GKN	2.10%
GlaxoSmithKline	2.10%
Phoenix Group Holdings	2.00%
Rio Tinto	2.00%
AstraZeneca Plc	1.90%
FBH Holdings	1.80%

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.