Investment trusts see inflows into income sectors

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Investment trusts see inflows into income sectors

High-yielding investment trusts have raised the most money over the year to date as investors seek rising dividend streams, data from the Association of Investment Companies has found.

According to the AIC data, net fundraising over the year to date for the sector is a record £3.9bn, which Annabel Brodie-Smith, communications director at the AIC, said was a higher total raised than in any whole calendar year in history.

She said the highest fundraising activity was mainly from higher-yielding companies in specialist sectors, as well as from Woodford Patient Capital, which raised £800m at launch and £30m subsequently through issuance activity.

Ms Brodie-Smith said: “The specialist, higher-yielding sectors continue to raise the most money and attract the highest ratings.”

Adviser view

Gary Jefferies, director for Kent-based H&D Wealth, said: “Traditionally, within the larger portfolios there has always been a place for investment trusts, and they could be useful for income within flexible drawdown.

“However, the main area to consider is whether the level of income at outset is sustainable over the longer term. In addition, if the trust is geared, is the client prepared to take the extra risk?

“Generally the consideration would be that if used at all, the trust would only be used as a proportion of the portfolio to slightly enhance the overall income. The crucial aspect of drawdown is while looking to provide a reasonable yield the capital value is maintained.”