Using investment trusts for income

Using investment trusts for income with JPMorgan’s Simon Elliott

 
To start the week we had a fireside chat with Simon Elliot, former head of investment trust research at Winterflood Securities, who joined JP Morgan as client director in September of last year.

We covered a lot of ground in the conversation. Simon started off by talking through some of the structural benefits that investment trusts provide, as well as some of the changes which have taken place in the past decade, notably around the growing popularity of enhanced dividends. There was some discussion as to whether paying income from capital will remain popular, given the shift we’ve seen towards value investing.

Another topic looked at was the AIC’s dividend hero list. Aside from running through this as an example of the benefits that trusts can provide, there was also a question from the audience about whether or not the list can end up being more of a marketing tool, rather than a useful way for investors to gauge performance.

The two other main themes were around alternatives. These have been a popular source of income for investors over the past decade. However, as a result of rising interest rates – the other main theme – valuations have come down and discounts widened. Aside from considering what rate hikes mean as a whole for income investors, Simon gave some thoughts on what they mean for investors in alternatives and how warranted the widening discounts really are.
 

 

 
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