Saturday, 16 March 2013

Investment Trust Income Portfolio

Back in early January, I did a guest post for RIT “Investing for Income Using Investment Trusts”. Here’s a link to that article 

I thought it may be a good long term project to monitor the progress of this portfolio as if it had been started on 1st January 2013 so I have taken the closing prices for each investment trust at the end of 2012 and allocated a nominal sum of £2,000 to each.

Last year, I moved my sipp into income drawdown as I felt I could generate a better income over the long term than taking an annuity. Investment trusts will now generate a large percentage of my drawdown income and hopefully rise each year to keep pace with inflation - a sort of index-linked annuity substitute.

The core portfolio is selected from the growth & income sector - both UK and global - and also includes some of the higher yielding trusts from other sectors including global growth, far east (ex Japan), smaller companies and some fixed interest.

Here’s the portfolio with current price valuations and also a small amount of accumulated cash from dividends. I will keep a record of dividends as they are received and, from time to time, reinvest these either into existing trusts or possibly one or two additions to the portfolio. Over time, this should provide a demonstration of the effect of turbo-charging the portfolio returns.
Name Epic Sector No. Held Current Value % Yield
City of London CTY UK Gr & Inc.    630    2,192   4.1
Murray Income MUT UK Gr & Inc.    300    2,250   4.2
Temple Bar TMPL UK Gr & Inc.    200    2,224   3.4
Edinburgh EDIN UK Gr & Inc.    390    2,207   3.9
Murray International. MYI Global G&Inc.   190    2,293   3.5
Bankers BNKR Global Growth    430    2,236   2.7
Law Debenture LWDB Global Growth    500    2,390   3.0
Hend Far East HFEL Asia (ex Japan)    600    2,178   4.5
Schroder Oriental SOI Asia (ex Japan) 1,100    2,250   3.4
B/Rock N. Am BRNA N America 1,925    2,213   3.5
Aberforth Smaller ASL Smaller Cos.    290    2,320   2.8
New City High Yield NCYF UK High Inc. 3,000    1,988   6.1

Sub Total 12 ITs

Add Cash Divis

Value 15th March

Less Start Value


Gain Since 1st Jan

% Change


Over the long term, investment trusts have demonstrated their ability to maintain a good record of paying a steadily rising dividend through good years and bad. Indeed some of the trusts in the portfolio have delivered  a rising income for decades -  City of London 46 yrs, Bankers 45 yrs,  Murray Income and  Temple Bar   29 yrs.

The reason they can do this is because they hold back some of their income in revenue reserves in the good years - up to 15% - and use these reserves in poor years to smooth returns for the investor.

I will update progress from time to time - probably at the end of the year. As ever, please DYOR - a good place for investment trusts is the aic

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