Three income trusts the pros are picking for 2021

TL;DR

Investment professional reflects on the unique lessons of 2020 and the opportunities within the investment trust sector.

Transcript

hello with me today i have thomas mcmahon senior investment trust analyst at kepler trust intelligence hello thomas thanks for joining me today good morning good to speak to you now look 2020 has been like no other and it's been a mixed year for the investment trust sector is there anything that you've learned from the past year even as an investme... Read More

Key Insights

• ❓ Lessons from 2020 emphasize diversification and preparedness in investment portfolios.
• 🎁 The investment trust sector presents unique opportunities during crises with significant discounts.
• ✋ Premiums on investment trusts raise risks, requiring high conviction in underlying assets.
• ❓ Income investors can explore alternative sectors like renewables for dependable yields.
• 🇬🇱 Specific trusts like Green Coat UK Wind and City of London show resilience and potential for income growth.
• ❓ The UK market could offer value in 2021, especially if Brexit uncertainties are resolved positively.
• 💇 Revenue reserves in investment trusts provide a buffer against dividend cuts during challenging times.

Questions & Answers

Q: What important lesson did 2020 teach about investment portfolio diversification?

The unexpected events of 2020 highlighted the necessity of diversifying investment portfolios to be prepared for unforeseen circumstances that can render prior analysis irrelevant.

Q: How did the investment trust sector react to crises like the 2007-2008 financial crisis and the events of 2020?

The investment trust sector experienced sharp share price declines, creating opportunities for investors to capitalize on significant discounts within a short period, showcasing the sector's resilience.

Q: Is it worth buying an investment trust at a premium, and what factors should investors consider?

While buying a trust at a premium raises risks, a high conviction in the underlying assets can justify it. Evaluating the valuation assumptions and the track record of the trust are crucial before making a decision.

Q: How can income investors navigate the challenges of generating income in 2021?

Income investors can consider sectors like infrastructure and renewable energy for reliable yields, as these areas offer political support and stability even during economic downturns.

Summary & Key Takeaways

• 2020 showcased the importance of diversification in investment portfolios due to unexpected events.

• The investment trust sector saw indiscriminate share price drops, offering significant opportunities.

• Premiums on investment trusts raise risks but can be worthwhile with high conviction and thorough investigation.