Giving investment advice often is like showing off a garden – “if only you’d come last week”. Strangely, although equity markets are very high and international trade will be impacted by US tariffs and Brexit, there are some opportunities.
If you need income you need look no further than these three investment trusts. You won’t know what to do with your money – they all yield the sunny side of 4%.
First, Merchants Trust, founded in 1889, trades at a 3.6% discount to Net Asset Value (NAV) and yields a stonking 4.94%. Manager Simon Gergel explains his philosophy:
“In this environment, our strategy is not to position the portfolio for one specific scenario, but to place a strong emphasis on portfolio construction. We aim to hold a broadly diversified portfolio of companies, across many different industries, both domestically exposed and those with multinational or global businesses.”
Rather amazing that he is paid to deliver such platitudes.
Murray International founded in 1907 is often at a premium to NAV, but now is at a discount of 2.6% and yields 4.45%. Bruce Stout invests in overseas companies I have never heard of with hardly any overlap with Merchants Trust. Of course capital appreciation has to be sacrificed if you are greedy for income but capital preservation is attainable in the long term.
My third choice is Utilico Emerging Markets, a new entrant founded in 2005. It has gone up by 280% since then, giving a compound annual return of 10.7%. It is at a discount to NAV of 14.6% and yields 4.44%. The biggest country exposure in its portfolio is Brazil (21%) closely followed by China (20%) and then Romania (10%). No overlap with Merchants or Murray that I can see. In the grand story of our island history this is not a time to invest at home. Go west, go east but don’t keep your money at home.
Goldman Sachs are offering a savings account in the UK, Marcus, that yields a measly 1.9%. If that’s want you want, there are low yielding investment trusts that over the long term should produce satisfactory growth. A topic for another day. Well, if it all goes wrong don’t be too proud to beg.