Research from Oriel Securities suggests that there are over 20 closed ended equity funds in the UK investment trust universe, each with a market capitalisation of over £70m, that are yielding above 4%.
“For investors prepared to take equity risk, these may be attractive for income investors at a time of exceptionally low interest rates. In addition, the property, infrastructure, renewable energy and debt fund sectors also continue to offer attractive yields,” Oriel said.
The 4% figure compares favourably against the FTSE All Share yield of 3.4%. For some trusts this has occurred because of falling share prices, and in other cases they have benefitted from their ability to leverage.
A number of the funds identified have yields around 5%. Some of the funds are trading at discounts to their net asset value per share, while others are trading at a price that implies a premium against NAV.
|Fund||Market Cap (£m)||Yield (%)||Discount (%)|
|European Assets Trust||183||6.6||4 disc.|
|BlackRock Commodities Income||103||6.1||4 prem.|
|BlackRock World Mining||633||5.9||6 disc.|
|Henderson Far East Income||351||5.6||3 prem.|
|Merchants Trust||496||5.1||3 prem.|
|Shires Income||71||5.1||2 prem.|
|Henderson High Income||183||5.0||4 prem.|
|British Assets||373||4.9||4 disc.|
|Middlefield Canadian Inc||114||4.8||2 disc.|
|Scottish American||320||4.3||3 prem.|
|Dunedin Income Growth||394||4.3||2 prem.|
|BlackRock Latin America||169||4.2||8 disc.|
|Murray Income||514||4.1||2 prem.|
|Murray International*||1,359||4.1||11 prem.|
|BlackRock Latin America||176||4.0||8 disc.|
|City of London IT||1,086||4.0||3 prem.|
|JPM Russian||200||4.0||10 disc.|
|JPM Global Emerging Inc||349||4.0||5 prem.|
|Schroder Income Growth*||176||4.0||2 disc.|
|F&C Capital & Income||230||4.0||3 prem.|
Source: Oriel Securities