The highest yielding investment trusts

Regular readers will know that we are keen on investment trusts in general. Subscribers will also have seen that this week’s magazine included a model investment trust portfolio. You can see it here (if you are a subscriber, that is).

Our model portfolio didn’t focus particularly on income, and some have asked for a list of the highest yielding trusts. Good news, then, that Oriel Securties has just sent me the very thing. The table below shows a list of trusts that mainly invest in listed equities, are over £50m in size, and have a historic yield of over 4% (the FTSE All Share currently yields 3.7%).

None of them made our final list – Murray International and Edinburgh Investment Trust were on the short list, but were eventually rejected as trading on premiums to their net assest value (NAV) that we thought were a little too high for comfort.

We are interested in several of the below, and I’ll probably take a closer look at Dunedin Income and Growth, and British Assets. One thing to note is that the income return from European Assets isn’t quite what it seems –the directors pay whatever dividend they feel is suitable out of both income and capital every year.

The investment trust rules have recently changed to allow other trusts to do this so, as Oriel says, this method of generating yield may soon “become more widespread”.

Highest yielding equity funds

Name Div yld (%) Market cap (£m) Prem/(disc) (%) 1yr NAV Gwth (%) 3yr NAV Gwth (%)
European Assets 7.4 82 (10) (20) 12
Shires Income 6.6 54 3 (7) 31
Henderson High Income 6.6 114 4 (6) 28
Merchants 6.5 365 4 (12) 26
Schroder Income Growth 5.5 125 (5) (7) 20
British Assets 5.4 330 (1) (13) 19
Henderson Far East Income 5.4 295 3 (5) 13
Middlefield Canadian Income 5.2 85 3 (16) 59
Baclrock Commodities Income 5.1 107 3 (22) 5
Dunedin Income Growth 5.0 319 1 (6) 32
JPMorgan Global Emerging Income 5.0 183 4 (5) N/A
Aberdeen Latin American 4.8 60 (3) (11) N/A
City of London 4.7 682 5 (3) 34
Standard Life Equity Income 4.7 103 (4) (8) 21
Value and Income Trust 4.6 79 (19) (8) 33
Edinburgh Investment Trust 4.6 930 7 1 40
Murray Income 4.6 408 2 (4) 33
JPMorgan Claverhouse 4.6 217 (7) (12) 20
TR Property (Ord) 4.5 373 (12) (21) 22
Scottish American 4.5 280 5 (14) 35
JPMorgan Mid Cap 4.4 92 (15) (14) 19
INVESCO Income Growth 4.4 123 (0) (0) 36
Schroder Oriental Income 4.2 265 1 (1) 57
F&C Capital & Income 4.2 184 3 (5) 19
Manchester & London 4.1 68 (11) (24) 6
TR Property Sigma Shares 4.1 78 (24) (26) 22
Perpetual Income & Growth 4.1 545 (0) (2) 34
Murray International* 4.0 1,100 10 (2) 41
Securities Trust of Scotland 4.0 118 3 (3) 37
Blackrock World Mining* 4.0 est (a) 1,025 (10) (26) 33
Temple Bar 4.0 530 5 (4) 38
FTSE 100 3.9 (5) 23
FTSE 250 3.1 (11) 37

Source: Thomson Reuters Datastream. (Table published in Oriel Securities Sector Review 15 June 2012.)

Includes funds primarily investing in listed equities. Excludes funds with market capitalisations of less than £50m. Excludes funds with multiple share classes. Discount/premiums based on estimated NAVs diluted (ex-revenue) at close on 13/06/12. NAV performance figures are based on diluted NAV at FV and are capital return only. (a) BlackRock World Mining has introduced a higher dividend policy in the current year and we estimate a dividend of 23p per share.

  • tony d

    How can you leave M&G High Income Inv Tst off this list ??!!
    It has yielded more than 10% over the last 3 years (now 12%)
    has a discount to nav of some 25%, a wide spread of the usual
    FT 250 shares and ‘normal gearing’; what have I missed?!

  • Romford Dave

    The answer is always in the small print tony d, if you look below the list the paragraphs in italics includes the following excusion: –

    ‘Excludes funds with multiple share classes’

    The IT you refer to has 3 share classes, although the returns you claim it enjoys are not reflected in the companies documentation – what have I missed?

  • Ben G

    As mentioned m&g is a split cap so the 12% div received may well be a return of part of your capital rather than a straight div, the reason being the zero pref shares have to be repaid first at a pre-agreed price in 2017 when the fund is dissolved which leaves little left to be returned to the income share holders….