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Retired savers’ growing appetite for investments that produce a steadily rising income has generated a big demand for investment trusts. This is because many equity income trusts boast 30 or more years of unbroken dividend increases, making them very attractive to the millions of people aiming to supplement their pensions with some investment income. This doesn’t matter whether these investment incomes are generated through the likes of stock options such as beyond meat shares, or even through pension funds that can accrue a nice amount of interest on top.
Yet many of them have been thwarted in their attempts to buy investment trusts because their fund supermarket does not stock them, or because their adviser or fund research website does not recommend them – a problem Times Money has previously highlighted.
However, the tide seems to be turning. This week FundCalibre, the fund research group, announced it was expanding its field to cover investment companies. Tony Yousefian, its investment trust research specialist, says: “A recent poll of visitors to the FundCalibre site showed a strong interest in learning about and putting money into investment trusts. So whether investors are looking for dividend stability or a global portfolio of innovators, we’ve done the research for them and identified investment trusts that fit the bill.”
He added that the ability that investment trusts have to hold back up to 15 per cent of their income each year to help boost payments in bad years is likely to prove very attractive.
FundCalibre’s move was welcomed by Annabel Brodie-Smith, the communications director of the Association of Investment Companies (AIC), the investment trusts’ trade body. She says: “We have seen increased interest in investment companies from private investors and advisers, with purchases by advisers tripling since 2012. We very much encourage more research.”
FundCalibre has produced a list of 11 trusts that it has awarded an elite rating. They include City of London, an equity income trust, Scottish Mortgage, a global growth trust, and F&C Smaller Companies, specialising in small-cap stocks from around the world.
Mr Yousefian says: “City of London aims to provide growth in income and capital by investing in predominantly larger UK companies with international exposure. It is one of the dividend ‘heroes’ and has increased its dividend payment every year for the past 50 years. The trust has been managed since 1991 by Job Curtis and his conservative personality is reflected in his determination to minimise the risks of losing money, as well as making it. This is a great trust for someone starting out in investing and wanting a solid and reliable investment that won’t give them any nasty surprises.”