Income trusts for 2023 and big discounts that catch my eye

TL;DR

Investment trusts for income, especially City of London and C to UK High Income, offer dependable income and potential dividend growth. Consider MG Credit Income for higher yields and exposure to floating rate loans and bonds.

Transcript

foreign with me today I have Thomas McMahon Investment Trust research manager at Kepler trust intelligence hi Thomas Eileen good to see you again um Thomas for those of us who want to invest for income over the next uh 12 months which investment trusts do you think we should all be looking at well I think the pandemic period has really highlighted ... Read More

Key Insights

• 🇻🇦 Investment trusts, such as City of London and C to UK High Income, are preferred for dependable income and potential dividend growth.
• ☠️ MG Credit Income offers higher yields through exposure to floating rate loans and bonds, with income increasing as interest rates rise.
• 🎁 Private equity trusts may be undervalued, with wider discounts presenting an opportunity for investors.
• 🥹 UK small caps provide a potential for extra returns with longer-term holding periods.
• 🛩️ Trusts like aberforth and BlackRock small companies offer value and growth investment opportunities with significant discounts.
• 👲 Quality portfolios in the small cap sector tend to have discounts narrow during prosperous times.
• 🔒 Investors should assess the trust's gearing situation before investing in private equity trusts.

Questions & Answers

Q: Which investment trust offers dependable income and consistently generates good returns?

City of London is a top choice for dependable income, with rock-solid revenue reserves and a history of year-after-year dividend generation.

Q: Can you recommend an investment trust for higher income with an innovative dividend structure?

C to UK High Income is worth considering, as it offers elevated dividends to ordinary shareholders while providing potential capital growth to other shareholders.

Q: Are there any trusts that offer higher yields and are not heavily impacted by interest rate increases?

MG Credit Income is an interesting option, as it invests in floating rate loans and bonds that provide increasing coupons as interest rates rise, resulting in potentially higher yields.

Q: Are there any sectors or individual trusts currently trading at significant discounts?

Private equity trusts have seen their discounts widen to a considerable extent, making them potentially attractive. UK small caps also offer discounts, particularly with trusts like aberforth and BlackRock small companies.

Summary & Key Takeaways

• Investment trusts, particularly City of London, are generating reliable income with solid revenue reserves.

• C to UK High Income provides higher income potential by taking on more equity risk and offering an innovative dividend structure.

• MG Credit Income invests in floating rate loans and bonds, providing a defensive option with increasing income as interest rates rise.